Luxury stocks look up to LVMH: the French group sets an upbeat tone for the industry

LVMH has given some hopes to the luxury industry after posting better-than-expected results during the first quarter. The French group reported a 13 percent rise on an organic basis, an increase that lifted the stock…and the market’s spirits.

“We had a good start to the year and we expect these good trends to continue,” finance chief Jean-Jacques Guiony told an analyst conference call. Market experts such as Rogerio Fujimori, analyst at RBC Europe, concur: “This is a remarkable start to the year for LVMH, with broad-based market share gains in a buoyant environment for luxury goods,” said Fujimori in a note to clients.

Shares in LVMH touched record highs in early trading on the back of the news.

Chinese consumer’s comeback and digital push, key to LVMH’s Q1 growth

'Explosive' sales make China 'great again' for Louis Vuitton after consolidation to stem downturn, acknowledged the group’s CEO. In fact, many brands of the LVMH family such as Louis Vuitton and Givenchy have seen record sales powered by Chinese consumers, who seem to have recovered from a 2-year slowdown.

Analysts had estimated a rise of 8.5 percent, projecting growth to taper off after a 12 percent jump last year. While China’s economic growth is expected to slow to 6.5 percent in 2018 compared with 6.9 percent last year, data analysed by Bloomberg reveal that demand for luxury products remains high in the Asian country.

Another stream of growth for LVMh is their digital channel: its e-commerce proposition, as well as a renewed product range, are resonating well with younger, prosperous customers.

LVMH highlighted its digital efforts, such as its sponsorship for a start-up accelerator that aims to encourage entrepreneurs developing new technologies and services for the luxury industry.

“Digital allows us to reach the client more quickly and directly,” says Bernard Arnault, LVMH’s chairman and France’s richest man, speaking at Monday’s inauguration ceremony for the group’s startups accelerator. “Innovation and creativity are fundamental values for LVMH.”

After strong Q1, analysts reinforce their ‘buy’ recommendation on LVMH stock

Royal Bank of Canada set a 265 euros price target on LVMH Moet Hennessy Louis Vuitton (EPA:MC) in a research report sent to investors in early April. The brokerage recommends buying the stock.

Other research analysts including Deutsche Bank have recently commented on the stock, setting their price recommendations between 270 and 281 euros apiece.

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Chart:LVMH - 2001 - 2018 Q1 total revenue and revenue by business group in million EUR

Photo:Louis Vuitton, S/S18 Dress Collection