(Bloomberg) -- LVMH sales growth slowed at the start of the year as wealthy consumers reined in spending on pricey Louis Vuitton handbags and Hennessy Cognac.

Organic revenue at the luxury group’s fashion and leather goods unit — its biggest division — rose 2% in the first quarter, Paris-based LVMH said. That compares with 18% growth a year earlier at the unit, which houses brands such as Louis Vuitton, Christian Dior, Celine and Loewe.

LVMH shares gained 3.6% in trading in Paris amid relief among investors who’d feared even worse, given the overall slowdown in luxury demand worldwide. The stock is still down almost 6% over the past year.

The quarter’s growth bolsters prospects of a “soft landing” for LVMH and the wider luxury sector, Bernstein analyst Luca Solca wrote in a note.

LVMH Moet Hennessy Louis Vuitton SE has been among the most resilient of the big luxury groups, in turn helping make the company Europe’s second largest by market value. Run by Bernard Arnault, the world’s richest person, LVMH has some 75 luxury brands spanning fashion, jewelry, hotels and spirits.

Its consistency in recent years contrasts with French rival Kering SA, which last month warned that sales at its biggest brand, Gucci, likely dropped by about 20% in the first three months of this year, hurt in particular by China.

Wealthy Chinese have curbed outlays on pricey goods as economic uncertainty weighed on confidence. Still, LVMH’s results provided some reassurance to investors. 

Chinese demand for fashion and leather goods — at home and abroad — rose almost 10% in the quarter, LVMH Chief Financial Officer Jean-Jacques Guiony told reporters.

“Even though it is quite weak now in mainland China, I think the Chinese tourist is offsetting the weakness of domestic China sales,” Barclays Plc luxury analyst Carole Madjo told Bloomberg Television. 

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LVMH’s organic revenue fell 6% in Asia, excluding Japan, while sales in Japan rose by almost a third in the quarter. Sales grew 2% in both the US and Europe.

Into 2024, Chinese shoppers make up about 23% of luxury goods spending globally, versus 33% pre-pandemic, according to Bloomberg Intelligence luxury goods analyst Deborah Aitken.

“That is expected to repair more into 2025, backed by low double digit growth,” she said. “Hong Kong, Macau and Japan remain favored destinations to shop, with Japan luxury spend boosted by attraction of yen weakness.”

Among the group’s major labels, Louis Vuitton did slightly better than the unit average growth while Dior’s performance was slightly worse, Guiony said. 

LVMH’s wine and spirits unit, which includes brands such as Moet & Chandon and Hennessy Cognac, struggled as demand remained weak. Revenue slumped 12%, worse than estimates.

The selective retailing unit was the top performer, led by beauty retailer Sephora, LVMH said.

Jeweler Tiffany & Co., which generates about half of its sales in the US, has been more exposed to inflation-conscious customers there than Bulgari, whose presence in Asia is more important, Guiony said. Meantime, LVMH doesn’t expect a “fabulous year” for watches, he said.

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Purveyors of luxury goods enjoyed a post-pandemic spending boom which started to evaporate last year for brands catering to entry-level luxury customers. The most exclusive brands such as Hermes International SCA have so far withstood the downturn. Hermes reports quarterly sales on April 25.

--With assistance from Guy Johnson, Kriti Gupta, Blaise Robinson and Jerrold Colten.

(Updates with chart, Barclays and BI analyst comments from ninth paragraph)

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