- LVMH’s stock took a hit, plummeting 6% following the group’s unexpected sales shortfall in Q3. This signaled a potential slowdown in demand for luxury goods. LVMH, the renowned conglomerate that boasts ownership of prestigious brands such as Louis Vuitton, Tiffany & Co, and Moët champagne, posted Q3 revenues of just under €20 billion, reflecting a 9% increase. Analysts had anticipated €20.5 billion.
- LVMH’s core fashion and leather-goods division made a significant contribution, generating €9.8 billion in revenue, marked by 9% organic sales growth. The selective retailing unit, which encompasses brands like Sephora, experienced a remarkable 26% boost in revenue. However, the perfumes and cosmetics, as well as watches and jewelry segments, saw comparatively modest growth, with sales up by 9% and 3%, respectively.
Wines and spirits was the only business unit that recorded a decline in sales, with a substantial 14% contraction. - On a more positive note, all regions showed growth, with Japan standing out as the star performer, achieving a remarkable 30% increase in sales. Asia (excluding Japan), the largest market, witnessed an 11% surge in sales, while the second-largest region, the United States, posted a modest 2% gain.
- Earlier in the year, LVMH had a strong start, with its stock surging over 30%. However, it has now relinquished those gains and is in the red for the year. LVMH is now trading at a forward Price-to-Earnings (PE) ratio of 20x, aligning closely with its long-term historical average.
- Notably, Chairman Bernard Arnault has been actively purchasing LVMH stock over the past few months, amassing €215 million in shares since July. In response to the recent selloff, we have increased our position in this high quality company in the Cratos BCI World Flexible Fund.By Desmond Eskov
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