Chairman Bernard Arnault’s French conglomerate said operating income will jump above 12 percent for the half and promised a “significant” full-year EBIT (earnings before interest and taxes) gain. Like most firms here, LVMH reports sales and profits separately. It is scheduled to provide its income statement on Sept. 15.
On a comparable basis, sales rose 19 percent in the second quarter, driven by robust champagne and cognac purchases, a strong selective retailing performance and continued double-digit growth at the star Louis Vuitton brand.
Sales exceeded most analysts’ expectations. But provisional operating income was slightly below consensus projections, taking LVMH stock down 2.8 percent to close at $70.07, or 57.25 euros, in trading on the Paris Bourse.
Nonetheless, the accelerated second-half trend — LVMH sales rose 1.7 percent in the first quarter — provided the latest evidence that European luxury firms from Gucci to Burberry are poised to gain steam going into the second half. Last year, LVMH’s net profits increased 30 percent to $818.2 million, or 723 million euros.
“All businesses are growing in the more favorable environment,” said Patrick Houel, LVMH chief financial officer, in a conference call. “We believe the trend will continue in the second half and we are targeting significant growth for the year.”
Second-quarter sales were up 2.83 billion euros, or $3.47 billion.
HSBC analyst Nathalie Schneider estimated organic sales rose in the “20 percent region in May and June,” after a 15 percent gain in April. “We rate this a very strong showing,” she said.
Double-digit like-for-like growth at Louis Vuitton was driven by a 50 percent sales surge in the U.S., increasing numbers of tourists and blowout products such as the multicolored Theda bag.
Analysts said additional products, including a jewelry line designed by Marc Jacobs and the Bellaix luggage line, as well as store openings in Shanghai and on Rodeo Drive in Beverly Hills should spark even stronger Vuitton sales in the second half.