LVMH's Strong Q3 Numbers Lift European Luxury Good Stocks

By Steve Wynne-Jones
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LVMH's Strong Q3 Numbers Lift European Luxury Good Stocks

Shares in LVMH rose on Thursday, lifting up other European luxury goods stocks, after the Moët & Chandon owner posted higher-than-expected third quarter sales.

LVMH's strong sales came in spite of unrest in Hong Kong that has caused luxury labels to lose out on business there.

Revenue Growth

‘In the third quarter, revenue was up 17% compared to the same period in 2018,’ the group said.

Organic revenue growth was 11%, a performance in line with the trend recorded in the first half of the year. The United States and Europe saw good progress in the third quarter, as did Asia, despite the difficult context in Hong Kong, the company said.

LVMH shares were up by around 5% in early session trading, driving up the stock prices of its rivals such as Kering , Hermes and Hugo Boss.


Marketing Investment

Some analysts have cautioned that LVMH may be an outlier in the industry, however.

It is riding high on massive investments in marketing and hot new designers for its top brands, and has benefited more than most from thriving demand for luxury wares from Chinese shoppers in recent years.

Gucci, Hermes and Italy's Moncler are also among the stronger performers, but some peers are struggling to attract younger customers or crack markets such as mainland China, and the divide in the sector is growing.

"We think it is more than likely that LVMH materially outperformed its direct peers," analysts at Morgan Stanley wrote in a note.


Luxury firms also benefited from a stock market relief rally after leather handbags and spirits such as cognac - LVMH produces Hennessy - were left off a list of new U.S. tariffs.

But some have pointed to a tougher economic backdrop in the United States in recent quarters, one of several headwinds with which the industry is grappling.

LVMH is due to hold a conference call at 1500 CET on its third-quarter sales update.

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

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