LVMH Sees Growth From Chinese Customers

By Matthew Dalton

PARIS -- China's well-heeled shoppers in the fourth quarter splurged on Louis Vuitton, Dior and other luxury brands owned by LVMH Moët Hennessy Louis Vuitton, defying a Chinese economic slowdown and the threat of trade tensions between Washington and Beijing.

LVMH, the world's biggest luxury company, on Tuesday said revenue rose 9% in the fourth quarter, hitting EUR13.7 billion ($15.7 billion). Revenue for the full year was EUR46.8 billion, a record. Net profit in 2018 rose 18% to EUR6.35 billion.

Jean-Jacques Guiony, LVMH's chief financial officer, said spending by Chinese customers, either in China or on trips abroad, grew by double digits for most of the company's major brands in the quarter.

"We see no particular slowdown in the fourth quarter compared with the rest of the year," Mr. Guiony said.

Luxury companies have been shaken by investor fears of a slowdown in China, whose shoppers account for roughly a third of all luxury-goods purchases world-wide. Escalating tensions between the Trump administration and Beijing have taken their toll, sending shares in the sector down sharply since last summer. LVMH's shares are down 17% since nearing an all-time high in August.

Apple Inc. further stoked fears early this month when it slashed its revenue forecasts because of lower-than-anticipated iPhone sales in China. Some analysts view the iPhone as a luxury tech product and an indicator of the appetite for luxury goods more broadly.

The results show that Chinese shoppers are still spending at a strong clip on some of the industry's marquee brands, despite geopolitical turmoil. LVMH, seen as a bellwether for the luxury industry, also owns jeweler Bulgari, fashion house Fendi, cognac maker Hennessy and dozens of other brands.

Mr. Guiony said that a mild slowdown should have little impact on the propensity of Chinese shoppers to buy luxury goods. "Viewed from here, it seems as if China was plunging into recession," he said. " We are talking about 6.3% growth. That's a lot."

Sales in the U.S. suffered a mild slowdown. That was in part due to lower revenue at Sephora, the cosmetics retailer owned by LVMH. Mr. Guiony said the result might be due to a falloff in promotions organized by the brand during the quarter.

Write to Matthew Dalton at Matthew.Dalton@wsj.com

(END) Dow Jones Newswires

January 29, 2019 12:25 ET (17:25 GMT)

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