Luxury Goods Revival: LVMH Reports First Sales Increase This Year, Shares Surge 13%

TradingKey - On Wednesday, French luxury conglomerate LVMH announced its first sales growth of the year, signaling its intention to consolidate its leadership in the luxury sector. This news sent its stock price soaring by 13%. 

LVMH, which owns renowned brands such as Louis Vuitton, Tiffany, and Dior, reported an organic sales growth of 1% in the third quarter, ending a two-quarter decline. This uptick was largely driven by improved demand from China. The group noted that, excluding Japan, the Asian region saw significant sales growth due to Chinese consumers, with sales increasing by 2% in Q3 after falling 9% in the first half of the year. Additionally, both Europe and the US showcased robust local demand this quarter.

In terms of specific business operations, LVMH stated that all its divisions exceeded revenue expectations, with the flagship retail segment showing the strongest performance, recording a 7% organic growth compared to the same period last year. Sephora, a beauty retailer under LVMH, delivered exceptional results, while sales of the beauty brand Rhode hit a historic high.

LVMH's Chief Financial Officer, Cecile Cabanis, cautioned that the fourth quarter still faces challenges from currency fluctuations and macroeconomic uncertainties. However, the group remains confident, focusing on enhancing brand appeal, and is encouraged by the increasing demand from China.

Morningstar analyst Jelena Sokolova highlighted that Chinese consumers have accumulated significant savings post-COVID, suggesting further potential for market recovery in China. LVMH's growth resurgence in China is likely to invigorate industry sentiment.

On Wednesday, LVMH's surge propelled the European luxury segment to rise collectively. As of press time, the STOXX Europe Luxury 10 index climbed 6.87%, with Dior shares up over 13%, Burberry surging past 7%, and Kering, the parent company of Gucci, also rising over 7%. The broader French stock market was buoyed as well, with the CAC 40 index increasing more than 2%.