Advertise with

LVMH has luxury market in the bag as shares soar
LVMH has luxury market in the bag as shares soar

LVMH has luxury market in the bag as shares soar


By Robert Williams - Apr 12th 2017, 11:10

Paris — LVMH shares rose to a record in Paris after the luxury leader’s sales far exceeded estimates on rebounding demand for items from Louis Vuitton bags to Hennessy cognac. 

Figures released after markets closed on Monday showed first-quarter organic revenue rose 13%, compared with the 8% median forecast.

All divisions beat estimates, with the fashion and drinks units standing out. The stock gained as much as 2.9% to €213.50, the steepest intraday advance in more than a month.

Investment in brands such as Louis Vuitton has enabled LVMH to extend its leadership of an industry that is undergoing a turnaround after several years of ebbing demand in China and a slowdown in travel to Europe.

Such levels of growth should not be expected for the full year, the company said.

"As the sector bellwether, LVMH’s beat should support the luxury space," said RBC Europe analyst Rogerio Fujimori. The results "also raise the bar for other stocks reporting in coming weeks".

Prada SpA is due to report full-year earnings on Wednesday, while Gucci owner Kering will announce first-quarter results on April 25. Kering shares rose 1.4% in Paris.

LVMH’s quarterly sales rose 15% to €9.88bn. Analysts had predicted €9.5bn, according to the median of 17 estimates.

Fashion Flourish

The beat was the biggest in six years, according to data compiled by Bloomberg.

Growth was led by its fashion and leather-goods unit, where organic sales rose 15% in the quarter, compared with the 9% estimated by 16 analysts surveyed by Bloomberg.

"There is a better consumer environment for luxury and LVMH is gaining share," said Mario Ortelli, an analyst at Sanford C Bernstein.

He cited product innovation at Louis Vuitton and rapid growth in the Fendi brand as driving gains in fashion and leather goods.

The wines-and-spirits and perfume-and-cosmetics units also came in well ahead of analyst projections, as did the selective retailing division, which includes beauty emporium Sephora and the tax-free airport retailer DFS.

Selective retailing is the group’s second-largest division, with sales of €11.9bn in 2016 — but has the narrowest margins.

DFS has been dragging down the division and offsetting the strong performance by Sephora, said Deborah Aitken, an analyst at Bloomberg Intelligence.

"This could be an important turnaround," Aitken said.

A steep increase in Hennessy cognac’s volume during the quarter will lead to a shortage of inventory for the rest of the year, the company said, repeating an earlier warning.
© BusinessLIVE MMXVII 

Read more about: prada | lvmh | luxury goods | louis vuitton | gucci | fashion

Related News

SAFW competitions offers entry into fashion industry
19/07/2019 - 08:41
It opened the door for David Tlale to showcase his designs at New York Fashion Work, Mmuso Maxwell to supply his garments to retail giant Woolworths and Clinton Lotter to take his work to the UK. Now, South African Fashion Week (SAFW) is once again looking to grow the fashion and creative industry by opening it to emerging designers.

Burberry's new logo-strewn design is a surprise hit
16/07/2019 - 14:49
Strong demand for designer Riccardo Tisci’s new fashion ranges helped revenue at British label Burberry grow faster than expected in the first quarter, sending its shares soaring as a high stakes overhaul showed early signs of promise.

Fashion house Chanel parades its independence as profits rise
18/06/2019 - 12:49
Luxury fashion group Chanel, whose star designer Karl Lagerfeld died in February, reported higher annual sales and profits and once again reaffirmed its independence, stating it was not for sale.

British online fashion retailer Boohoo bucks subdued industry trend
13/06/2019 - 09:12
British online fashion group Boohoo bucked a tough retail market with robust sales growth in its latest quarter as its offer of cheap clothing, delivered quickly, chimed with shoppers.

Luxury group lifts shares on Vuitton's 'unheard of' China growth
06/06/2019 - 08:59
LVMH shares gained after the head of the Louis Vuitton brand gave a rosy view of its China business, easing concerns about the effects of a trade war with the US.