Wealthy shoppers dismiss trade fears to fuel LVMH
The world’s well-heeled shoppers sent first-half revenue at luxury conglomerate LVMH Moët Hennessy Louis Vuitton SE to a record high, brushing aside worries of a trade dispute between the U.S. and China to splurge on everything from handbags and jewelry to fine wines.
Revenue in the first six months of the year hit EUR21.8 billion ($25.5 billion), up 10% compared with the same period a year ago, LVMH said Tuesday. LVMH’s net profit jumped 41% to EUR3 billion.
LVMH is the world’s biggest luxury-goods company by sales, and its results are seen as a bellwether for the industry. LVMH owns leather-goods giant Louis Vuitton, couture house Christian Dior, high-end jeweler Bulgari, cognac label Hennessy and dozens of other brands.
The results reflect solid economic growth across major economies that has prompted wealthier consumers world-wide to open their wallets. The Trump administration’s tax cut has sent the U.S. stock market to record highs. Chinese growth has defied expectations of a slowdown. And the eurozone is recovering after years of crisis.
Shoppers splurged even as the U.S. and China kicked off a trade fight that has roiled stock markets and fueled fears of a global slowdown. During the half, the two countries have imposed tariffs on dozens of products.
LVMH Chief Executive Bernard Arnault, whose family is the company’s controlling shareholder, struck a cautious note amid the record results.
"Despite buoyant global demand, monetary and geopolitical uncertainties remain," Mr. Arnault said.
Investors worry that an economic slowdown in China could dampen spending by Chinese shoppers, who are the luxury industry’s most important clientele. Beijing has launched a campaign to curb lending, leading economists to predict that the economy is set to slow.
But LVMH executives Tuesday said there were no signs of a Chinese slowdown hitting its business.
Still, Jean-Jacques Guiony, LVMH’s chief financial officer, told investors that maintaining first-half growth rates for the rest of the year would be a challenge, given LVMH’s strong performance in the second half of last year and the threat of a spillover effect from U.S. and Chinese tariffs.
"The current trends cannot realistically be extrapolated to the rest of the year," Mr. Guiony said.
LVMH’s fashion-and-leather-goods division, which includes Louis Vuitton, the world’s biggest luxury brand by revenue, led the way in the half. Revenue at the division rose 25% to EUR8.6 billion, though the increase is partly due to LVMH taking full control of Dior last year.
Revenue at LVMH’s wine and spirits division lagged behind other divisions, slipping 1% to EUR2.3 billion. The company has been struggling with poor harvests in the Cognac region of France, limiting production of the liquor despite strong demand in the U.S. and China.
Write to Matthew Dalton at Matthew.Dalton@wsj.com
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