LVMH’s luxury allure eclipses fears of trade war

By BLOOMBERG

PARIS • LVMH survived the opening rounds of a global trade war as the Chinese consumer’s appetite for French luxury goods surged during the second quarter.

Sales rose 11%, the Paris based owner of Louis Vuitton handbags and Sephora cosmetics said in a statement late on Tuesday, beating analysts’ expectations. The world’s largest luxury company reported double-digit percentage growth in sectors from fashion to jewellery and cosmetics. The shares rose as much as 2.6% early yesterday in Paris.

The luxury conglomerate said it plans “numerous product launches” before the end of the year as it races to stay ahead of fast-growing competitors like Kering SA’s Gucci and closely held Chanel.

Because of the threat of higher tariffs and other global economic uncertainties, “the current trends cannot realistically be extrapolated to the second half of the year,” CFO Jean-Jacques Guiony said on a call.

Chinese consumers account for roughly a third of luxury purchases, according to consulting firm BCG — and as much as 70% of the sector’s growth. LVMH sales in Asia surged 17% last year, and travelling Chinese shoppers lifted other markets. Now, investors are watching carefully to see how long the boom can last for luxury’s leader, especially as US President Donald Trump’s trade moves risk shaking confidence in the industry’s biggest client base.

“The threats are there but I don’t think they have materialised yet in any way,” Guiony said.Shanghai’s CSI 300 stock index has fallen 11% this year, fuelling fears that high-end shoppers could tighten their belts.