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MarketScreener Homepage  >  Equities  >  Euronext Paris  >  LVMH Moët Hennessy Vuitton SE    MC   FR0000121014

LVMH MOËT HENNESSY VUITTON SE (MC)
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Luxury Shares Feel the Pinch -- WSJ

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10/11/2018 | 08:48am CET

By Matthew Dalton

PARIS -- A mild slowdown at LVMH Moët Hennessy Louis Vuitton SE, the world's biggest luxury goods company, sent a shudder across the sector Wednesday, pushing down stock prices amid fears that a pullback by China's big-spending shoppers could end a yearslong boom for the industry.

LVMH shares traded down more than 7% in Paris after executives detailed third-quarter sales, disclosed Tuesday evening on a call with analysts. Gucci parent Kering SA fell 10%, Burberry Group PLC dropped more than 8% and Hermes International SCA was down 5.5%.

Louis Vuitton, LVMH's biggest brand, reported slightly slower sales from Chinese shoppers during the third quarter, LVMH Chief Financial Officer Jean-Jacques Guiony told investors and analysts Wednesday. "But we are really talking about going from high-teens [growth rate] to midteens," Mr. Guiony said.

The French luxury-goods conglomerate reported third-quarter revenue of EUR11.38 billion ($13.08 billion), up 10% when adjusting for currency impacts and other factors. But the figure marked a decline from 11% in the second quarter and 13% in the first quarter.

Those third-quarter numbers roughly hit market forecasts, but analysts say LVMH needed to do better than that to reassure investors. China's economic slowdown has cast a cloud over the sector in recent months, raising fears that the industry would be hit hard if Chinese shoppers rein in their spending. They are the luxury industry's most important clientele, representing roughly a third of all purchases globally.

Geopolitical tensions are also roiling the sector. Investors fear a widening trade dispute between the Trump administration and China could become a full-fledged trade war, hurting Chinese consumers. Investors appear to be betting that negotiations between the two nations to end the dispute will reach an impasse, said Luca Solca, an analyst at Exane BNP Paribas.

"If that's the case, it's only rational you price a less favorable environment for luxury," Mr. Solca said.

Concerns about China have sent LVMH shares down around 15% since the end of August, when they were trading near an all-time high.

Still, Mr. Solca said, "in the current numbers there's very little you can show in the way of bad news."

LVMH is viewed as a bellwether for the luxury goods sector, with dozens of brands including high-fashion house Dior, cognac maker Hennessy, watchmaker TAG Heuer and dozens of others.

Mr. Guiony also highlighted weakness at some of LVMH's other businesses. The U.S. watch market was weak, particularly for watches priced less than $3,000, he said. "It's really bad below $3,000," he said.

"We are having a tough period with TAG Heuer in the U.S.," he added.

On Tuesday, the company said its fashion and leather-goods division, which includes Louis Vuitton and accounts for more than a third of total revenue, posted 14% organic sales growth in the third quarter.

Sales at its perfumes-and-cosmetics division were up 11% in the three months and its watches-and-jewelry arm was up 10%.

Investor concerns about luxury stocks were compounded by a research note from Morgan Stanley, in which the bank's analysts said they believed Chinese consumer confidence -- traditionally a leading indicator for European luxury companies -- has peaked, with a weaker trend expected in the second half.

--Anthony Shevlin contributed to this article.

Write to Matthew Dalton at Matthew.Dalton@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
BURBERRY GROUP 2.29% 1766.5 Delayed Quote.-1.42%
KERING 2.58% 409.7 Real-time Quote.4.25%
LVMH MOËT HENNESSY VUITTON SE 2.05% 254.35 Real-time Quote.3.65%
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Financials (€)
Sales 2018 46 856 M
EBIT 2018 9 996 M
Net income 2018 6 445 M
Debt 2018 4 808 M
Yield 2018 2,38%
P/E ratio 2018 19,50
P/E ratio 2019 17,92
EV / Sales 2018 2,79x
EV / Sales 2019 2,54x
Capitalization 126 B
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Technical analysis trends LVMH MOËT HENNESSY VUITTON
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TrendsBearishBearishNeutral
Income Statement Evolution
Consensus
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Mean consensus OUTPERFORM
Number of Analysts 28
Average target price 323 €
Spread / Average Target 29%
EPS Revisions
Managers
NameTitle
Bernard Arnault Chairman & Chief Executive Officer
Antonio Federico Belloni Group Managing Director & Director
Jean-Jacques Guiony Chief Financial Officer
Delphine Arnault-Gancia Director
Antoine Arnault Director
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