(Bloomberg) -- LVMH said it’s joining in the luxury industry’s rebound from a slowdown at the end of last year, underlining the resilient demand for high-end fashion.

The Louis Vuitton owner’s performance in China has “recovered very significantly” in January, Chief Financial Officer Jean-Jacques Guiony said after the company posted slower sales growth in the fourth quarter due to the Covid flare-up in Asia’s largest economy.

“Obviously it’s only three weeks and it’s hard to make a trend of three weeks,” he said in a Bloomberg TV interview Friday. “But we can be really optimistic” that “China has actually turned the page on the disruption of the pandemic.” 

The pattern echoes trends at rivals Richemont, the owner of Cartier, and Burberry Group Plc. Both saw a slump in Chinese demand at the end of 2022, but said sales there had rebounded this month. 

LVMH’s key fashion and leather goods division saw organic sales rise 10% in the final three months of last year, the company said Thursday. That’s the slowest pace of the year, but still above analysts’ estimates. 

LVMH shares were 1% lower in early trading, but they’ve risen 17% so far this year.

Billionaire Bernard Arnault, LVMH’s chief executive officer and the world’s richest man, said the French company is confident heading into 2023, but remains “vigilant to current uncertainties.” The group’s cash cow, Louis Vuitton, crossed €20 billion ($21.8 billion) in sales last year, while the parent company posted record revenue.

LVMH’s results were described as a “mixed bag” by Citigroup analyst Thomas Chauvet, who highlighted a miss on operating profit. That was partly due to higher spending on advertising and promotions in the second half of the year.

“The reopening of China is a potential game-changer,” the analyst said, adding there are legitimate concerns about a slowdown in US demand.

Still, LVMH has so far experienced solid growth despite soaring inflation and slowing economies, making it a darling of investors. The luxury group recently became the first European company to surpass €400 billion in market value, while Arnault’s wealth now exceeds that of tech luminaries Elon Musk and Jeff Bezos. 

While LVMH doesn’t break out China results, sales in Asia excluding Japan sank 8% last quarter. That contrasts with growth of 22% in Europe, 29% in Japan and 7% in the US, according to Guiony.

Arnault said he’s confident Chinese authorities will aim to boost domestic economic growth. “If that’s the case, and it started in January, we have all the reasons to be confident” about LVMH’s performance there, he said, noting that trends in Macau “were incredible” so far this year.

Sales of high-end goods to Chinese customers — the industry’s top spenders prior to Covid — were constrained by pandemic-related restrictions for much of last year. While the abrupt end to strict Covid rules early last month initially led to a rapid spread of the virus that kept consumers at home, investors are now anticipating a V-shaped recovery.

Tourism Outlook

Guiony said on a call Thursday that while LVMH is seeing significant growth rates in China since the year began, he doesn’t expect a return of Chinese tourists to Europe in large numbers until 2024. There’s still limited airline capacity to the continent and flights are costly, meaning the return of package tours remains some way off, he predicted.

Chinese customers at home and abroad represented a third of the personal luxury goods market in 2019, but that shrank to between 17% to 19% last year, according to Bain & Co. 

--With assistance from Caroline Connan and Anna Edwards.

©2023 Bloomberg L.P.