CAC 40-listed luxury company LVMH Moët Hennessy Louis Vuitton, or LVMH (FR:MC) reported lower sales growth in its third quarter as the global luxury market faces a downturn. The company witnessed a slowdown in its demand as the post-pandemic luxury surge lost steam, and rising inflation affected consumer spending.
Despite the uncertainties, the group remains optimistic about its ongoing expansion, relying on the vibrancy of its brands to bolster its position in the global luxury market.
The LVMH share price yesterday gained 3.21% after the company reported its trading update for the first nine months of 2023. Over the last six months, the stock has lost 12% in trading, losing its spot as the most valuable company in Europe.
LVMH is a prominent European conglomerate well-known for its ownership of around 75 luxury brands, including Dior, Louis Vuitton, Sephora, Fendi, Bulgari, and others. The company’s extensive product portfolio spans diverse categories such as bags, watches, cosmetics, spirits, perfumes, and beyond.
Trading Update
The company reported a 14% increase in its organic revenue for the first nine months, falling behind analysts’ expectations. In the third quarter, organic revenue growth was 9%.
Among its segments, sales in the Wines and Spirits segment witnessed a sharp decline of 14% in Q3, mainly hit by reduced Cognac sales in the U.S. and the normalization of the previous high demand. Sales for the company’s largest division, Fashion and Leather Goods, grew by 9%. In the third quarter, as compared to analysts’ forecast of 11.2%. However, this growth rate was slower compared to the robust 21% increase observed in the second quarter.
The company’s segment, Selective Retailing, which includes travel retail and Sephora, demonstrated the highest growth, surging by 26% during the quarter. Its brand, Sephora, exhibited outstanding performance, consistently capturing additional market share in North America, Europe, and the Middle East.
In terms of its regional performance, there is a widespread normalization of growth across all geographical regions.
What is the Future Price of LVMH Stock?
MC stock has received a Strong Buy rating on TipRanks, backed by a total of 14 recommendations from analysts. It includes 11 Buy and three Hold ratings. The LVMH share price target is €890.86, which is 29.13% higher than the current trading level.
