Shares in LVMH Moet Hennessy Louis Vuitton fell on Wednesday after the luxury goods seller posted underwhelming financial results that signaled the end of a post-pandemic boom in demand for Champagne and expensive handbags.
The Paris-headquartered conglomerate –- that owns top brands including Dior, Moët and Louis Vuitton –- said growth in its sales started to slow in the third quarter of 2023 as demand returned to pre-Covid levels amid the downturn in the global economy.
LVMH stock
MC,
dropped 6% on Wednesday in a fall that also led to share price drops in its major luxury goods selling rivals including Burberry
BRBY,
Hermes International
RMS,
and Prada
1913,
Christian Dior, the 41% owner of LVMH, also declined sharply.
The slower growth, which was largely driven by softer sales in its US and European businesses, saw LVMH fail to match analysts’ expectations as the firm said it generated €19.96 billion ($21.19 billion) worth of revenues in the third quarter of 2023, a decline of 1%. Analysts polled by FactSet had expected €20.57 billion in sales.
Sales from LVMH’s Asian segment also underwhelmed, as revenues from the firm’s businesses in the continent outside of Japan increased just 11%, in a sign that sales from China are not rising fast enough to offset declines in the west.
“There has been much debate in the last few weeks about the pace of normalization for the sector: LVMH confirmed that this is taking place, and possibly at a slightly faster pace than anticipated in the last month,” said analysts at JPMorgan led by Chiara Battistini.
More broadly, European stocks were moderately weaker after the Stoxx Europe 600
XX:SXXP
on Tuesday enjoyed its strongest one-day rise since Nov. 10, 2022, according to Dow Jones Markets Data. The French CAC 40
FR:PX1
struggled in particular as LVMH declined.
Elsewhere in Europe, shares in Fresenius Medical Care
FME,
dived 19% after Novo Nordisk said its Ozempic weight-loss drug showed success vs. kidney disease in a trial, news that lifted shares of the Copenhagen drugmaker
NOVO.B,
by 3%.
BP shares
BP,
added 2% as the U.K. oil energy major lifted its long-term earnings guidance.
Read the full article here