LVMH, the world’s biggest luxury goods group, said sales momentum picked up in June and had especially improved in China, after store closures sparked by the Covid-19 pandemic tore a hole in the Louis Vuitton owner’s second-quarter sales.

Like rivals, LVMH temporarily closed stores and paused manufacturing as the outbreak spread from the key Chinese market to Europe and the United States.

“I do not think we have ever seen such a perfectly negative alignment of planets against us,” Financial Chief Jean-Jacques Guiony told a conference call, although he also sounded a note of optimism about an upturn in countries such as China as confinement measures ease.

The conglomerate’s rivals, including Gucci owner Kering and France’s Hermes, which are yet to report earnings, are exposed to similar trends, although LVMH’s business is more varied, as it also produces champagne and wine. Its share price has held up better than that of peers during the crisis.

In an encouraging sign for the sector, LVMH’s sales momentum improved across Asia excluding Japan in the second quarter, with comparable revenue falling by 13% versus a 32% slump in the previous three months.

But it remains exposed to travel restrictions, affecting its duty free stores in airports, while many of the shoppers it targets in cities such as Milan or Paris are tourists and these are thin on the ground at present.

Guiony said the group’s travel retail business would continue to suffer for several more quarters, and warned that domestic shopping by Chinese consumers could not offset the near absence of purchases by Chinese tourists travelling abroad.

TIFFANY APPROVALS

Overall, LVMH’s revenues came in at €7.8 billion ($9.2 billion) in the April to June period, down 38% on a like-for-like basis, which strips out the impact of currency swings and acquisitions. That was a touch better than some analysts had expected, with those at UBS citing a consensus for a 39% fall in comparable sales.

The group — which has spent massively on marketing at its big brands like Christian Dior and Vuitton in recent years — said it would control costs and remain more selective in its investments.

It has also increased prices at its most resilient labels, hiking them again by 5% at Vuitton at the end of June — the third price increase at the brand since March.

Run by France’s richest man Bernard Arnault, LVMH was in the middle of working through its $16.2 billion acquisition of US jeweller Tiffany when the pandemic hit.

It examined ways in which it might be able to lower the deal price as a result, though these attempts have been put on hold for now, people close to the matter have said.

Guiony said antitrust approvals for the deal had been delayed by the pandemic, and said LVMH had little visibility on when these might come through. But he said that the particularly steep sales fall in LVMH’s watches and jewellery division during the second quarter had not changed the group’s view on the deal.

Profit from recurring operations came in at €1.67 billion in the first six months of 2020, down 68% from a year ago.