LVMH Gains to Record as Louis Vuitton, Dior Fuel Growth

(Bloomberg) -- LVMH shares rose to a record after second-quarter sales breezed past analysts’ estimates, fueled by creative revamps at its Louis Vuitton and Christian Dior fashion brands.

Sales of fashion and leather goods rose 20% on an organic basis in the second quarter. The stock rose as much as 3.3% in Paris to a record, lifting LVMH’s market value to almost 200 billion euros ($223 billion).

LVMH’s growth accelerated as it boosted marketing despite concerns about a slowing economy in China, which has been driving luxury demand. European labels are benefiting from cuts to sales taxes and import duties that are encouraging Chinese customers to visit stores at home rather than abroad.

The robust growth in the key fashion and leather division is a sign that LVMH’s move to reshuffle its menswear designers last year is paying off. In his first year at Christian Dior, new designer Kim Jones has won fans by reworking the brand’s classic Saddlebag for men, as well as designing leopard-print sneakers and romantic double-breasted suits. His counterpart at Louis Vuitton, Virgil Abloh, issued crocodile utility harnesses, puffer coats and runway collections rife with references to pop culture like the Wizard of Oz.

Another star designer, Hedi Slimane, took over at Celine, where he is overseeing women’s collections and has added the brand’s first menswear line.

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Second-Richest Man

Brands’ “consistently refreshed creativity” was key to LVMH’s success, Chairman Bernard Arnault said in a statement. As the stock has gained lately, the billionaire has been vying for the ranking of the world’s second-richest person with Bill Gates.

While LVMH continued to see its fastest growth in Asia, Europe also accelerated as the company saw rebounding sales in France, where Yellow Vest protests in Paris dwindled.

"We see improvement across the board,” Chief Financial Officer Jean-Jacques Guiony said in a conference call with analysts. “This is not only a Chinese show."

LVMH’s first-half profit from recurring operations rose 14% to 5.3 billion euros ($5.9 billion). Margins were stable as the fashion division increased investments in marketing and the store network. "We are not milking the brands in good times," Guiony said. "It’s the right thing to do if we want to strengthen the portfolio."

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