Louis Vuitton owner flags June turnaround after sales slump
PARIS/MILAN (Reuters) - LVMH, the world's biggest luxury goods group, said it had noted 'strong signs' of a recovery since June which it hoped would extend into the coming months, after store closures tore a hole into the Louis Vuitton owner's second-quarter sales. Like rivals, LVMH was forced to temporarily close stores and pause manufacturing at some sites as the COVID-19 pandemic spread from the key Chinese market to Europe and the United States. The company is also exposed to travel restrictions, as it operates duty free stores in airports, and many of the shoppers it targets in cities such as Milan or Paris are tourists.
PARIS/MILAN (Reuters) - LVMH, the world's biggest luxury goods group, said it had noted "strong signs" of a recovery since June which it hoped would extend into the coming months, after store closures tore a hole into the Louis Vuitton owner's second-quarter sales.
Like rivals, LVMH was forced to temporarily close stores and pause manufacturing at some sites as the COVID-19 pandemic spread from the key Chinese market to Europe and the United States.
The company is also exposed to travel restrictions, as it operates duty free stores in airports, and many of the shoppers it targets in cities such as Milan or Paris are tourists.
"I do not think we have ever seen such a perfectly negative alignment of planets against us," Financial Chief Jean-Jacques Guiony told a conference call, although he also sounded a note of optimism about an upturn in countries such as China.
The conglomerate's rivals, including Gucci owner Kering and France's Hermes, which are yet to report earnings, are exposed to similar trends, although LVMH's business is more varied, as it also produces champagne and wine.
Its share price has held up better than that of peers during the COVID-19 crisis.
In an encouraging sign for the sector, LVMH's sales momentum improved across Asia excluding Japan in the second quarter, with comparable revenue falling by 13% versus a 32% slump in the previous three months.
Overall, LVMH's revenues came in at 7.8 billion euros ($9.2 billion) in the April to June period, down 38% on a like-for-like basis, which strips out the impact of currency swings and acquisitions.
That was a touch better than some analysts had expected, with those at UBS citing a consensus for a 39% fall in comparable sales.
The group - which has spent massively on marketing at its big brands like Christian Dior and Vuitton in recent years - said it would control costs and remain more selective in its investments.
Run by France's richest man Bernard Arnault, LVMH was in the middle of working through its $16.2 billion acquisition of U.S. jeweller Tiffany when the pandemic hit.
It examined ways in which it might be able to lower the deal price as a result, though these attempts have been put on hold for now, people close to the matter have said.
LVMH said on Monday the Tiffany purchase would close once it gets all regulatory approvals, though it gave no details on the timing.
The group's profit from recurring operations came in at 1.67 billion euros in the first six months of the year, down 68% from a year ago.
(Reporting by Silvia Aloisi and Sarah White; Editing by Gareth Jones)
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