KEY POINTS

  • LVMH grew sales by 10% on an organic basis in 3Q18. This was in line with analysts’ expectations.
  • Fashion and Leather Goods was the strongest-performing segment, with sales up 14%.
  • Selective Retailing, which includes beauty retailer Sephora and travel retailer DFS, posted organic growth of 5%, compared with the consensus estimate of 8.1% and down from 9% in the prior quarter.

3Q18 Update

LVMH reported that it grew sales by 10% year over year on an organic basis in 3Q18, in line with the consensus estimate recorded by StreetAccount. Organic growth slowed a little from 11% in the second quarter, with the Selective Retailing segment proving a slight drag on top-line growth in 3Q18. Total sales were up 9.6% year over year.

In the first nine months of 2018, LVMH reported an 11% increase in organic revenues with a 10.1% increase in total revenues.

The company reported the following organic growth rates for 3Q18:

  • LVMH grew Wines and Spirits sales by 7%, versus the consensus estimate of 5.7%. This was an acceleration from 3% organic growth in the second quarter.
  • Fashion and Leather Goods is LVMH’s biggest segment, and it was the strongest performer in 3Q18. The segment’s sales were up 14%, while analysts had penciled in organic growth of 12.4%. The increase compared with 13% growth in the second quarter.
  • Sales in the Perfumes and Cosmetics segment were up 11% versus analysts’ expectations of 11.1% and slowing from 14% in the prior quarter.
  • Watches and Jewelry sales increased by 10% and came in below expectations of 11.0%. This marked a sequential slowing from 12% in the second quarter.
  • Selective Retailing, which includes beauty retailer Sephora and travel retailer DFS, posted organic growth of 5%, compared with consensus of 8.1% and down from 9% in the prior quarter.

Selective Retailing is LVMH’s second-biggest segment. Despite the meaningful softening of growth in this division, management noted “strong” organic revenue growth at Sephora and said that DFS “performed well.”

Outlook

The company did not provide quantitative guidance. For FY18, analysts expect LVMH’s revenues to increase by 9.9%, to €46.9 billion, its EBIT to grow by 21.2% and its pretax profits to increase by 23.1%, according to S&P Capital IQ. Consensus calls for diluted, adjusted EPS of €12.78 in FY18, up from €10.18 in FY17. These estimates were collated before the latest results were announced.


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