Shares in France's LVMH rose over 5% to record highs today after the Louis Vuitton owner posted better than expected sales growth in the first quarter, helped by thriving Chinese appetite for luxury goods.
The upbeat start to the year for LVMH, the industry's biggest company and parent to brands like Christian Dior and Moet & Chandon, sets an encouraging tone for peers at the start of their reporting season.
Luxury goods firms benefited from a strong rebound in Asian demand last year, a momentum that has shown little signs of fading.
Paris-based LVMH, the industry's biggest company, benefited like many peers from a rebound in Asian demand last year and a growing following from younger shoppers.
That momentum has spilled into 2018, at a time when LVMH is shaking up some of its biggest brands like Vuitton and Dior with designer changes in menswear, and seeking to expand others like Celine with more growth online.
The company does not break out revenues for its brands but said Vuitton, which is expanding manufacturing plants for its high-margin handbags, had made a "remarkable" start to the year.
The group's fashion and leather goods division helped propel revenues in the first quarter, as the pace of sales growth accelerated from three months earlier.
LVMH's revenue across all sectors, including perfume and watches, reached €10.85 billion, up 13% from a year earlier on a like-for-like basis, which strips out currency swings and sales and acquisitions.
Analysts had expected growth of closer to 9%.
LVMH is the first major luxury group to report first quarter revenues. Its rivals include French conglomerate Kering, owner of Italian fashion brand-of-the-moment Gucci.
Companies with a wide array of businesses have been among the biggest winners of the luxury goods rebound, at a time of tough competition among labels to win over young, fickle consumers often influenced by social media.
Demand from Chinese consumers, the industry's single biggest client base, strengthened in 2017, after a crackdown on luxury gift-giving six years ago pummelled earnings.
But the industry remains vulnerable to geopolitical twists and turns, including tensions on trade between the US and China.
A strong euro has also been a headwind, in part as it can put off tourists shopping in Europe from spending.
