LVMH Defies Expectations: Market Cheers Even as Profits Fall Sharply
LVMH Moët Hennessy Louis Vuitton’s recent first-half financial results, which were announced the day before, made the French stock market smile on Friday. At 488.70 euros at the end of the day, the luxury goods giant’s stock was up 3.9 percent.
As previously mentioned, LVMH‘s net profit for the first half of the year dropped 22% to 5.7 billion euros. The company’s main fashion and leather goods division, which comprises Louis Vuitton, Dior, and Celine, performed poorly, and sales in Japan fell precipitously, which contributed to the decline. But the other sections of the company either met or exceeded expectations.
LVMH Stock Gets a Boost as Deutsche Bank Predicts Upturn
Deutsche Bank stated in a report on Friday that it believes an earnings trough is now imminent and that LVMH’s results were stronger than anticipated.
Investors have been waiting for an opportunity to revisit this stock and the conference call highlighted a number of factors which may encourage this including a ‘tangible’ recovery in China, market share gains in key brands and potential for structural efficiencies as well as ongoing tight cost management. Investors now view the risk/reward more favorably now that the 1H is out of the way, 2H forecasts have been rebased on FX and some of the more positive news is digested.
Browse PostsAdam Cochrane, a research analyst at Deutsche Bank
LVMH Eyes Stronger Second Half as Asian Demand Rebounds
Analysts predict that LVMH will have a better second half of the year due to strategic brand momentum and resurgent consumer demand in Asia. The luxury company may be entering a more stable development phase now that cost-cutting measures have been implemented and favorable foreign exchange adjustments have been reflected in updated estimates. Investors are keeping a careful eye on how LVMH uses its worldwide presence and portfolio of luxury brands to regain momentum and surpass forecasts in the upcoming quarters as market confidence returns.
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