French luxury goods maker sees forecasts surpassed by demand for quality watches but fails to woo Japan.
French luxury group LVMH Moet Hennessy Louis Vuitton reported faster-than-expected first-quarter sales growth, helped by surging demand for high-end watches, and reaffirmed its full year guidance.
The maker of Dior perfume, Fendi shoes and Veuve Clicquot champagne said on Wednesday sales in the three months to 31 March rose to €3.804 billion ($5.16 billion) from €3.555 billion in the same period a year earlier.
Excluding currency swings - which were negative for the group in the first three months - and acquisitions and disposals, like-for-like growth was 13%.
"LVMH will continue its growth in 2007 despite the difficult monetary environment at the beginning of the year," the company said in a statement. It reaffirmed guidance for "significant growth" in 2007 results.
Analysts polled by Reuters had on average expected first-quarter sales to rise 5.1% to €3.735 billion, or 9.7% on a comparable basis.
LVMH said its core Louis Vuitton brand had double-digit organic growth everywhere except Japan.
LVMH shares closed at €85.13 on Tuesday, about 4.5%t below a record €89.2 reached in February following 2006 results, having eased amid concerns about the luxury market in Japan and the impact of a strong euro on results.
Analysts said the first-quarter sales figures would help redress the concerns and LVMH shares should gain ground.
"The shares should react positively in spite of Louis Vuitton's softness in Japan," HSBC analyst Antoine Belge said in a research note, reaffirming a price target of €100.
Catherine Rolland at Kepler Equities said: "The sales figures are better than expected ... They should be well received by the market."
All divisions reported higher revenues than expected, except fashion and leather goods, which at €1.347 billion was in line with the poll's average €1.349 billion.
The fashion and leather goods division grew 4% on a reported basis or 10% in comparable terms.
By contrast, wines and spirits were much stronger than expected, with comparable sales up 15%t to €689 million. Some analysts had forecast a weak year-on-year performance given a strong start to the year in 2006.
LVMH said volumes at Hennessy cognac, owned jointly with Britain's Diageo, rose 18% year on year, with faster rates among premium vintages.
Sales of TAG Heuer and other watches rose 27% on a like-for-like basis to €189 million, topping all poll forecasts.