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Tuesday, May 21, 2024

LVMH stock soars 8% on strong earnings showing luxury sector strength

For a company responsible for some of the world’s most luxurious and coveted brands, it’s only fitting that LVMH should continue to soar in style. That’s exactly what happened on Friday when shares of LVMH jumped over 8% after the company reported higher-than-expected sales for 2023 and raised its annual dividend. Now that’s some news worth toasting with a glass of Moët & Chandon!

LVMH, which owns and operates iconic brands like Louis Vuitton, Moët & Chandon, Hennessy, Givenchy, Bulgari, and Sephora, among others, reported 2023 sales totaling €86.15 billion ($93.34 billion), exceeding consensus forecasts and representing 13% organic growth from the previous year. The company saw a notable boost in the fashion and leather goods sector, which experienced a 14% annual growth, while perfumes and cosmetics grew by 11%. However, wines and spirits experienced a 4% decline in sales.

Bernard Arnault, LVMH’s Chairman and CEO, attributed the company’s strong performance to the allure and desirability of its brands, despite economic and geopolitical challenges in 2023. He expressed confidence for 2024, emphasizing the appeal of their brands and the agility of their teams to navigate the current business landscape.

It’s been a bumpy ride for the luxury sector as a whole lately, but LVMH’s impressive results offered investors some reassurance. Competitor Burberry issued a profit warning in response to slowing demand, and the wider luxury sector was impacted by the news. However, following LVMH’s solid performance, luxury stocks broadly advanced and even Burberry saw a 1.7% increase in its shares on Friday morning.

Investors, mindful of the potential impact of unusually high annual comparisons from last year, are closely monitoring the luxury sector’s earnings cycle. Javier Gonzalez Lastra, a portfolio manager, predicted that luxury sector earnings are “likely to get tougher” through the first half of 2024.

But Arnault remains optimistic, looking ahead to LVMH’s partnership with the Paris 2024 Olympics as a new opportunity to reinforce their global leadership in luxury goods and promote France’s reputation for excellence around the world.

Amidst the challenges faced by the luxury sector, LVMH’s robust performance offers a beacon of hope and a reason to celebrate. With iconic brands, a resilient business strategy, and a global vision, the company continues to set the standard for luxury and style. Here’s to a prosperous and fashionable future for LVMH and the entire luxury industry!

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