LVMH and other luxury companies still benefit from the US market

Americans have not lost their love of luxury goods.

While retailers and consumer goods companies say Americans are particularly value-focused these days, high-end brands like Tiffany and Bulgari are building momentum in the United States. LVMH Moët Hennessy said its brands made gains in the United States in the fourth quarter amid weak sales in other parts of the world, confirming research showing the US economy is increasingly dependent on affluent consumers.

LVMH’s US revenue during the third quarter rose 3% year over year, but was negative in Europe and Asia. (Unfavorable currency exchange rates upset some sector results, executives said on a conference call Tuesday.)

LVMH has identified the United States as a strength for several product lines and brands, including Sephora’s fashion, leather goods, watches, jewelry and beauty businesses. The results lifted shares of LVMH and other European luxury companies, including LVMH, Hermès and Gucci owner Kering, in European trading.

Bank of America analysts said the wealthiest Americans, especially the top 5% in income, spend more freely than other consumers because they benefit disproportionately from the booming stock market. Stock gains “are likely to be larger in monetary terms than wage increases for these households and may have played an important role in supporting their spending,” the bank wrote in a report published last week.

Paychecks for wealthy Americans are also growing, rising at the most rate in nearly three years and more quickly than the incomes of middle- and low-income families, Bank of America said.

However, signs of caution are clear, even in luxury companies.

“There was a kind of rebound with the election that created a kind of surge in consumption” last year, Cécile Cabaniss, LVMH’s chief financial officer, said on a conference call Tuesday, according to a transcript made available by AlphaSense.