PARIS – Is no bad news good news? Analysts and investors at LVMH’s annual results presentation Thursday expressed relief as the luxury industry’s biggest player expressed tempered optimism regarding the length and severity of the industry’s current slowdown.

Chairman Bernard Arnault said he expected macroeconomic conditions for the luxury sector to improve despite the growing risk of a wider conflict in the Middle East.

“I anticipate that the economy will mostly move in a good direction for our products,” he said. “I’m relatively confident a solution will be found [in the Middle East], but we do have to be prepared for if the situation should degrade.”

LVMH reported sales that beat estimates, rising 10 percent on an organic basis in the fourth-quarter. Analysts had forecast 8 percent growth according to an average estimate compiled by Bloomberg. Full-year sales topped €86 billion ($93 billion).

The French group’s selective retailing unit was the fastest-growing division, with sales rising 21 percent as businesses like Sephora, Hong-Kong based tax-free shopping giant DFS and Belmond Hotels were lifted by the easing of Covid-era travel restrictions.

Fashion and leather goods, the company’s biggest and most profitable division comprising mega-brands like Louis Vuitton and Dior and fast-growing houses like Celine and Loewe, reported sales up 9 percent, in line with the previous quarter.

The news that LVMH’s fashion brands had maintained a stable pace of growth during the pivotal holiday season— rather than posting a feared further slowdown — will likely be well received by investors. The results “demonstrate LVMH’s defensiveness on revenues and margins … with the diversified business model once again delivering consistent and stable earnings growth despite moderating trends,” RBC Capital Markets analyst Piral Dadhania said in a note to clients.

Following a post-pandemic surge, growth has slowed sharply for the luxury sector in 2023, with many brands entering negative territory in the second half of the year. While Cartier- and Van Cleef-owner Richemont reported strong growth during the holiday quarter, as did top-end clothier Brunello Cucinelli, weaker brands haven’t fared as well. Burberry reported a 4 percent drop in same-store sales last quarter. Thursday, Ferragamo said full-year sales had fallen by more than 8 percent at constant currency compared to 2022.

At LVMH, full-year operating profit grew 8 percent to €22.8 billion euros ($24.7 billion).

Arnault recognised Louis Vuitton’s new CEO Pietro Beccari and menswear creative Pharrell for the brand’s strong performance in their first year, as well as womenswear designer Nicolas Ghesquìere, whose contract was recently renewed. A smiling, smartphone camera-wielding Arnault was evidently captivated at Pharrell’s star-studded menswear show last week, and seems to have brushed off critiques suggesting the designs were unsophisticated.

“It’s important to remember that Louis Vuitton isn’t a fashion business. It’s a business where we wanted to put some fashion into it starting in 1995,” he said. Pharrell’s emphasis on reinterpreting and celebrating historic products alongside proposing highly wearable new designs has clearly landed well with Arnault.

For other fast-growing brands like Loro Piana — a major winner in last year’s push toward logo-free luxury — and Christian Dior Couture, where sales have more than tripled in five years, Arnault said the group was preparing for slower growth at around 8 to 10 percent per year.

“The goal isn’t to have growth at any cost. I’m happy to pump the brakes a bit now rather than to end up pushing the cart.”

LVMH said it does not plan any significant price hikes this year.

Amid economic uncertainty and election-year retail gloom in the US, analysts see rebounding sales to Chinese clients as the most likely source of upside for the luxury sector. While LVMH’s slight beat on revenues won’t be interpreted by markets as spectacular, investors may embrace signs of steady improvement in the company’s Chinese business.

Sales to Chinese clients both domestically and abroad are steadily improving as the company annualises last year’s strict coronavirus lockdowns and as tourism picks back up.

Despite the fact that package tours have not made a comeback, sales to Chinese customers in Europe have recovered to around 70 percent of 2019 levels, the company said. As travel restrictions eased last year, the ranks of wealthy Chinese travellers who travel more independently swelled.

“Were not that far off 2019 levels with the Chinese at some brands like Vuitton in Europe. But it’s not the same clients, they’re not from the same places or buying the same things,” chief financial officer Jean-Jacques Guiony said. “We don’t expect the tour groups to come back tomorrow but we still manage to do an activity with the Chinese in Europe that’s perfectly significant.”

In Mainland China, the group hopes to fuel growth through a faster pace of store openings.

“The sales per square metre are really high; we’re at the maximum of what we can do while still offering a satisfying experience to our clients,” Arnault said. “As in the rest of the world, we’re focused on how we can buy really special locations.”

LVMH announced Thursday that two more of Arnault’s five children, watch executive Frédéric and Tiffany & Co. executive Alexandre, would join the company’s board, joining older siblings Delphine and Antoine (who lead Dior Couture and LVMH’s group communications, respectively). Former AXA CEO Henri de Castries is also set to join the board

In a meeting with analysts and press, however, the 74 year-old chairman and CEO said he had no plans to retire, “neither in the short or long term.”

Arnault also fired back at suggestions that the group would ever break up its various units. “In no case would we ever do any kind of spin-off, that would be a mistake. The group is built on a diversity of brands,” he said.