Sales of fashion and leather goods rose 20 percent on an organic basis in the second quarter. Analysts expected a 14.4 percent gain. The company’s overall sales grew 12 percent.
LVMH’s growth accelerated 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.
Brands’ “consistently refreshed creativity” was key to LVMH’s success, Chairman Bernard Arnault, who briefly overtook Bill Gates as the world’s second-richest person last week, said in a statement.
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 percent to €5.3 billion ($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."
LVMH reported the figures after Paris markets closed. The company’s shares have already gained 47 percent this year.
By Robert Williams; Editors: Eric Pfanner, Marthe Fourcade, Frank Connelly