LVMH (LVMHF) Q3 2017

Chris Hollis

Growth everywhere

“Organic revenue is up in the double digits across all of our business groups in the third quarter and nine-month period with the exception of Wines & Spirits.”

Jean-Jacques Guiony – CFO

But is not expected to continue in cognac

“…the type of growth we have had over the last two years, I would say is not something that we can replicate forever; the more normalized growth in volumes for cognac is more something like 3% to 4%, exceptionally 5% but nothing really more than that….we have had two tough years in terms of supply. We had hail in 2016 and we have drought in 2017. So, altogether, what we put in our sellers at cognac was lower than what we anticipated. So, all in all, this created a little bit of constraint for the business for the quarters to come I would say. It’s hard to quantify and to know exactly what will happen, but it’s pretty sure that the type of growth we have had for a number of quarters will not be replicated in the future.”

Price influence on growth negligible

“as in the preceding quarters, if not all but a big, big chunk of the growth was made of mix and volume numbers, the price increases were negligible. So the bulk of it was mix and volumes.”

But this may change next year

“…we will probably be able to pass limited price increases to customers. But as you know, we do it end of Q1, early Q2. So, it’s way too early to discuss. But obviously, we’ll think about it and that will be an element of our policy for next year.”

LVMH Earnings Call Notes

LVMH-Moet Hennessy Louis Vuitton’s (LVMHF) Management on Q3 2016 Results

Accelerated growth in Asia except for Japan

“Specifically we saw accelerated growth in Asia with the exception of Japan and continued good momentum in the U.S. and Europe outside of France. Both Japan and France were impacted by lower tourism or be it for different reasons or rather lower tourist spend.”

Improvement particularly in mainland China

“With regard to Hong Kong and Mainland China, there was some improvement there, particularly in Mainland China. The global business for the Group improved markedly from mid single digits in H1 to mid teen in Q3. So about as I said a marked improvement.”

Can’t say whether its a trend

“the question you‘re asking is actually the right one, but I may return it to you, the answer to whether this is a start of a new trend, I absolutely don’t know. We’ve seen in the past already some quarters in which the Chinese nationals were doing much better than in the preceding quarters and it was short lived. I’m not saying it will be the case, but I’m not saying it won’t be the case and we really don’t know. So we are just experiencing much better numbers with Chinese nationals in Q3 that’s what I can say at this point in time.”

We don’t view e-commerce as a big opportunity

“Finally on eCommerce you know our feeling on eCommerce, which we don’t view in itself as a big opportunity. We believe very much in the digital content of the selling experience having in mind that more or less all our clients before shopping within our stores grow on the website of the brand before. So basically we have to make a breach between the website and the store in a stronger way. So that’s what we have in mind and we also believe a lot in e-marketing particularly on the full network. It was — two years ago, it was not clear what we could do there, but now it becomes much clear. eCommerce is obviously something we need to have. We need to offer the feature to our clients, but in itself we don’t expect these to become a big, big channel otherwise it would have be the case already I would say.”

There is no way that we can do business with Amazon

“Third question on Amazon, I would say that no, not really the existing business model of Amazon, we believe that the existing business of Amazon doesn’t fit with our — doesn’t fit our luxury full stop, but also doesn’t fit with our brands. If they change the business model, I don’t know, but with the existing business model, there is no way we can do business with them for the time being.”