Commenting the unexpectedly strong performance at this business unit, Exane BNP Paribas analyst Luca Solca said: “This is an excellent set of results.”
Fashion and leather goods sales came in at 5.9 billion dollars during the first half of the year, a 5 percent increase year-on-year.
The performance, nearly doubling market estimates of 5-6 percent, came a day after Kering's Gucci posted its strongest sales growth in nearly two years, recalled Reuters.
Profitability at Louis Vuitton at “exceptional level”
By brands, LVMH explained that profitability at its flagship Louis Vuitton fashion brand remained at "an exceptional level", while demand for its smaller Dior, Fendi and Celine brands were solid.
Improving trends at Vuitton confirm “the success of the brand’s repositioning strategy and prospects of a return to double-digit earnings growth in 2015,” said Thomas Chauvet, an analyst at Citigroup in London. He reiterated his ‘buy’ rating.
Meanwhile, said total sales rose 6 percent on a like-for-like basis to 16.7 billion euros in the first half, above the Thomson Reuters I/B/E/S average estimate of 16.35 billion.
"This seems to indicate that self-help actions are getting more traction than we envisaged for the current financial year," pointed out Solca.
Japan, Europe and USA replace China as engine for growth
Explaining such solid figures, LVMH said Chinese tourists were shopping much less in mainland China, Hong Kong and Macau, and were going to Japan and Western Europe instead. "There is a shift of business to other geographies," Finance Director Jean-Jacques Guiony said about Chinese customers, the world's top buyers of luxury goods.
On a call with analysts, the group said that the better performance at the division came even as destocking by distributors continued in the Chinese market — a trend that it expected to continue into the second half of 2015.
In this regard, Bernard Arnault, chairman and chief executive officer, said: “We face the second half of the year with confidence.”
Group sales in the first six months reached 16.7 billion dollars, a 6 percent like-for-like increase over the same period of 2014 — and 19 percent higher in reported terms thanks mainly to a favourable currency effect, reported the ‘FT’.
Profit from recurring operations for the first half came in at 2.96 billion dollars, 15 percent above the figure for the same period last year, stressed the ‘Financial Times’.
On the back of the news, LVMH Moët Hennessy Louis Vuitton (LVMUY) climbed 2.65 percent in Paris after posting better-than-expected first-half results.