As Apple, Caterpillar, Nvidia, and many other companies wring their hands about the economic slowdown in China, LVMH is popping a bottle of Moët.
The world’s largest luxury group—owner of brands such as Louis Vuitton, Dior, and Moët & Chandon—said yesterday (Jan. 29) that sales of fashion items and high-end handbags in China accelerated in the recent quarter versus the same time last year. The results defied expectations that the country’s slumping growth is hampering the luxury industry, which relies on China for nearly a third of its sales. It was another bit of good news on China from the sector, after Switzerland’s Richemont, owner of Cartier, recently reported its sales were continuing at a healthy pace in the country.
LVMH, which cut prices in China by about 4% in July in accordance with the Chinese government’s move to reduce import duties and boost local shopping, added that it’s seeing similar results to start 2019. It wouldn’t provide much more detail, beyond saying that its products are becoming more desirable, and demand for them continues to grow around the world.
Overall, the company’s fashion and leather goods division—the largest segment of the company—was particularly strong for the year. Sales of those items grew 19% in 2018 (pdf), reaching about €18.5 billion (roughly $21.1 billion). LVMH has also drummed up a lot of excitement around its big labels, appointing Kim Jones artistic director of Dior Homme, naming Virgil Abloh head of men’s for Louis Vuitton, and giving Hedi Slimane creative oversight of all of Celine, which now includes a men’s line.
Chris Hollis, the company’s financial communications director, told analysts and reporters he was cautiously optimistic for the rest of 2019, during which he predicts strong sales for LVMH. But like others, he expects an economic downturn at in the coming years.
“We need to expect that at some point there is going to be an economic crisis—not to try to slow down investors in any way—but I’m just saying that we are being cautious,” he said. “We know that nothing goes on forever, and we know that this economic cycle won’t go on forever either.”
For now, though, LVMH is drinking up.