China loves Louis Vuitton and Louis Vuitton loves China. Parent company LVMH announced 2018 fourth quarter earnings yesterday and beat analysts expectations. Indeed, growth for fashion and leather was 17% rather than the predicted 10.5%. Moreover, LVMH pointed to accelerated growth in China. Bear in mind, however, that LVMH reduced prices in China by about 4% last summer. The cuts came from the Chinese government’s policy efforts to reduce import duties and boost local shopping.
Nevertheless, experts do warn about more cautious consumer conduct in China, as economic uncertainty grows (read: Luxury Stocks Take a Nose Dive). As one of the first luxury purveyors to report 4Q earnings, others are hoping Louis Vuitton’s results are a harbinger of good things to come. On the other hand, unlike many other brands, LVMH has a stable of brands, diversification and the resources to expand publicity and marketing efforts – factors that many not apply to all brands.
As the financial data comes in from other brands, the China effect will be interesting.