PARIS/MILAN, July 27 (Reuters) - LVMH, the world's biggest
luxury goods group, said sales momentum picked up in June and
had especially improved in China, after store closures sparked
by the COVID-19 pandemic tore a hole into the Louis Vuitton
owner's second-quarter sales.
Like rivals, LVMH temporarily closed stores and
paused manufacturing as the outbreak spread from the key Chinese
market to Europe and the United States.
"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 as
confinement measures ease.
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.
But it remains exposed to travel restrictions, affecting its
duty free stores in airports, while many of the shoppers it
targets in cities such as Milan or Paris are tourists.
Guiony said the group's travel retail business would
continue to suffer for several more quarters, and warned that
domestic shopping by Chinese consumers could not offset the near
absence of purchases by Chinese tourists travelling abroad.
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
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
It has also increased prices at its most resilient labels,
hiking them again by 5% at Vuitton at the end of June -- the
third price increase at the brand since March.
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.
Guiony said antitrust approvals for the deal had been
delayed by the pandemic, and said LVMH had little visibility on
when these might come through. But he said that the particularly
steep sales fall in LVMH's watches and jewellery division during
the second quarter had not changed the group's view on the deal.
Profit from recurring operations came in at 1.67 billion
euros in the first six months of 2020, down 68% from a year ago.
Rival Moncler, which makes luxury puffer jackets,
reported a first-half operating loss for the first time in its
history on Monday.
($1 = 0.8493 euros)
(Reporting by Silvia Aloisi and Sarah White
Editing by Gareth Jones and Tom Brown)