LVMH results prompt $70 billion buying spree in luxury shares By Reuters

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© Reuters. FILE PHOTO: A sign on the exterior of a Louis Vuitton luxury boutique operated by LVMH Moet Hennessy Louis SE is pictured in Paris, France, January 25, 2024. REUTERS/Benoit Tessier/File Photo

By Mimosa Spencer

PARIS (Reuters) -LVMH shares jumped as much as 11% on Friday, boosting peers including Kering (EPA:) and Hermes, as the French luxury giant’s latest sales figures reassured investors about the sector’s ability to cope with economic headwinds.

The share price surge, which added about $30 billion to LVMH’s market value, helped to lift the pan-European index to its highest level in two years.

The group, home to brands including Louis Vuitton, Christian Dior, Moet Hennessy and Tiffany & Co (NYSE:), posted a 10% rise in fourth-quarter sales on Thursday, driven by resilient demand – including from Chinese buyers – for its high-end fashion over the end-of-year trading period.

Investors had grown skittish about the industry’s prospects following LVMH’s previous report in October which showed its sales growth slowed to 9% after a long spell of routinely outpacing expectations with strong double-digit growth.

At a results presentation on Thursday, LVMH Chairman and CEO Bernard Arnault said he was happy with the company’s current growth rate.

With its latest report, LVMH “reassured – and coped nicely with a sharp slowdown in sales momentum” in the second half, Jefferies analyst James Grzinic wrote in a note to clients, adding the report should “steady nerves in the near term”.

As the sector comes down from the high paced growth seen after the pandemic, the diverging fortunes of brands has come into view, with those catering to wealthier clients, like Hermes, better equipped for economic challenges than those pursuing turnarounds, like Burberry, which issued a profit warning earlier this month.

But shares of Burberry also traded higher on Friday, up 2.9%.

LVMH was the top gainer on the euro-zone blue-chip STOXX50E index.

Friday’s gains added about $50 billion to the value of the top luxury and drinks companies, including LVMH, Gucci-owner Kering, Hermes, Pernod, Remy, Cartier-owner Richemont and Moncler, according to Reuters calculations.

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