PARIS — LVMH Moët Hennessy Louis Vuitton said it has seen a sharp acceleration in sales in Mainland China in April as consumers flock back to stores after the coronavirus lockdown, and it hopes the rest of the world will begin to recover from May or June.

Jean-Jacques Guiony, chief financial officer of LVMH, said its biggest brands — Louis Vuitton, Dior and Sephora — began to see a “significant” improvement with the progressive reopening of stores in Mainland China from mid-March.

“The numbers became positive in the second half of March and have been gathering speed in April,” he said on a conference call after the group reported that revenues fell 15 percent in the first quarter after the COVID-19 pandemic forced the closure of many of its stores and factories worldwide.

“We’ve seen very substantial growth rates, sometimes in excess of 50 percent, so it really shows the appetite of Chinese people after two months of lockdown to come back to stores and come back to their previous patterns of consumption,” Guiony said.

Among the brands enjoying growth of more than 50 percent since its stores in Mainland China reopened is Louis Vuitton, which is estimated to account for a quarter of the group’s sales, a source at LVMH confirmed.

Nonetheless, the improvement in domestic spending has not been sufficient to offset the sharp drop in Chinese luxury spending overseas due to ongoing travel restrictions. The evolution of overall spending by Chinese nationals at home and abroad is “improving, but still negative,” Guiony said.

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Group sales were down 17 percent in organic terms in the first three months of the year, broadly in line with a Bloomberg consensus estimate for a 17.8 percent drop. LVMH added that it was too early to evaluate the impact of store and factory closures on its annual sales and results.

“We can only hope that the recovery happens gradually from May or June after a second quarter which will still be very affected by the crisis, in particular in Europe and the U.S.,” the world’s biggest luxury group said in a statement.

Organic sales in the first quarter were down 32 percent in Asia, excluding Japan. They fell 10 percent in Japan and Europe, and 8 percent in the U.S., reflecting the spread of the COVID-19 epidemic across the globe during the period.

Guiony said he was confident in the strength of underlying demand. “There are a lot of people saying that things will never be the same again. I heard that a few times already. I don’t believe, frankly, in that,” he said.

“The most likely scenario is that the crisis will be over from an epidemic viewpoint in some months, if not weeks, so we are not talking about something that’s supposed to have a lasting impact on the business,” he added.

Nonetheless, LVMH will be making some major adjustments. It will trim its planned dividend by 20 percent to 4.80 euros a share.

Bernard Arnault, chairman and chief executive officer of LVMH, and each of the other executive board members have decided to forgo their salaries for the months of April and May, in addition to their variable compensation for 2020. As ceo of Christian Dior Group, Sidney Toledano will do likewise.

Guiony said LVMH will slash its capital expenditures budget by 40 percent this year, with most of the spending postponed until 2021. “We are doing whatever we can do and we have to do in order to offset the current situation,” he said.

The group has also been cutting operating costs such as rents. While landlords in Mainland China have agreed to bear a portion of the cost of compulsory store closures, in Europe and the U.S., the situation is more mixed, with a minority of landlords being “quite inflexible,” Guiony said.

“This is a bit disappointing and obviously will have long-lasting consequences in the way we deploy our capital in the future,” he remarked.

LVMH’s revenues totaled 10.6 billion euros in the three months ended March 31. The key fashion and leather goods segment posted sales of 4.64 billion euros, down 10 percent in like-for-like terms, versus a consensus forecast of a 15.8 percent decline.

While Vuitton’s performance was in line with the division as a whole, Dior performed better, while the other brands did worse, Guiony said. He noted the impact on sales was “reasonably homogenous” across product categories, and online sales saw rapid growth.

“When we were strong already, as it is the case with Vuitton or with Sephora, the strength in online plays and we are getting very substantial increases in the online business across the board, not only in China. It’s true in Europe, it’s true in the U.S., it’s true in Japan,” he said.

“It offsets a sizable portion — I will not quantify it — of the drop that we are witnessing recently in the brick-and-mortar business due to the closures,” Guiony added.

He expects spring-summer collections to remain on shelves a little longer, with the aim of drawing down inventories. “We’ll make available the fall collection a little bit later, and progressively we will get back to the normal rhythm of collections, which is a bit of a paradox, because we sell spring products in the winter and fall products in the summer,” he said.

LVMH is confident that production of pre-fall and fall collections will resume fairly quickly. Louis Vuitton has reopened the majority of its 16 production sites in France to make face masks, and hopes to get leather goods production up and running again as soon as stores reopen.

“As far as Italian manufacturers are concerned, they have proven in the past a very high degree of flexibility, so we have no particular worry there,” Guiony said. “When the conditions are favorable, they will resume production and they should be able to produce whatever we need for the second part of the year.”

Sales of perfume and cosmetics were down 19 percent in organic terms, while selective retailing — which includes Sephora and DFS, LVMH’s travel-retail business — tumbled 26 percent. Guiony reckoned it was too early to say if DFS will be loss-making for the full year, but said the retailer expects to cut costs by more than 25 percent.

The watches and jewelry division recorded a 26 percent drop in organic revenue, with Bulgari sharply hit by the closure of its stores in Asia. Meanwhile, organic sales of wines and spirits were down 14 percent.

Guiony said the luxury properties in LVMH’s Belmond division, which include the Hotel Cipriani in Venice and the Copacabana Palace in Rio de Janeiro, were unlikely to reopen in early April as planned and were looking to trim overheads, with some renovations postponed until next year.

But LVMH’s $16.2 billion acquisition of Tiffany & Co. — the largest deal in the history of the luxury sector — is still on track. “We will stick to the contract, full stop,” Guiony said.

Arnault praised the group’s employees for helping to produce masks and hand sanitizer, and procuring medical equipment. “Thanks to everyone’s commitment and the strength of its brands, the LVMH group maintains good resilience in the face of this worldwide challenge,” he said in a statement.

“For several weeks, our teams have once again demonstrated that excellence, creativity and responsiveness will allow us not only to overcome this crisis but, above all, to emerge even stronger when it fades,” he added.

LVMH unusually issued guidance last month, saying it expected overall first-quarter revenues to fall between 10 and 20 percent as a result of the widespread lockdowns to contain the spread of COVID-19.

The luxury giant had posted organic growth of 11 percent in the same period a year ago, and recorded an 8 percent rise in like-for-like sales in the fourth quarter of 2019.

The industry bellwether’s quarterly sales figures come before other luxury rivals Kering, due to publish figures on April 21, and Hermès on April 23. Compagnie Financière Richemont reports annual results on May 15.

The luxury market is expected to contract by 25 to 30 percent in the first quarter, according to Bain & Co., which also modeled three scenarios for the whole of 2020 — with the worst forecasting a drop of up to 35 percent in sales this year.

But with marquee brands like Louis Vuitton, a diversified portfolio and deep cash reserves, LVMH is expected to weather the storm better than most.

Exane BNP Paribas said in light of the International Monetary Fund’s forecast of a 3 percent contraction in the global economy, it now expects the luxury market to shrink by 20 percent in 2020, versus a forecast of 4 percent growth at the beginning of the year.

“LVMH has a significant scale advantage in an industry where fixed costs prevail, and it is the most diversified of all luxury companies,” analysts Melania Grippo and Guido Lucarelli said in a report this week.

“LVMH is strong in accessible product categories — Champagne, fragrances and cosmetics — where barriers to entry are high, making it one of the best positioned to tap into global middle class development,” they added.

Amid heightened uncertainty, recession-hit consumers are expected to seek refuge in heritage brands.

“Stronger brands that enjoy ‘must-have’ status in consumers’ minds will stand tall,” Luca Solca, analyst at Bernstein, said in a report titled “Global Luxury Goods — COVID-19: What comes next?” published on Thursday.

“The good news is that investors agree that the long-term prospects for the luxury sector remain strong, and that the current predicament — as serious as it is — will be temporary,” he added.

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