LVMH Allays Concerns on China Tensions -- WSJ
11 Ottobre 2019 - 9:02AM
Dow Jones News
By Matthew Dalton
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (October 11, 2019).
PARIS -- Strong third-quarter results at LVMH Moët Hennessy
Louis Vuitton SE buoyed shares across the luxury sector Thursday,
easing fears that months of protests in Hong Kong and U.S.-China
trade tensions would dent global sales of high-end brands.
Paris-based LVMH, the world's biggest luxury company, said its
revenue for the quarter was EUR13.3 billion ($14.6 billion), an 11%
increase after adjusting for the impact of currency fluctuations
and acquisitions. LVMH's shares rose 5.9%, while the news boosted
shares of Kering SA by 4.6%, Cie. Financière Richemont SA by 2.2%
and Prada SpA by 1.1%. Burberry Group PLC rose 0.7%.
Investors had worried about the effect on sales of the protests
against Beijing's encroachment on the autonomy of Hong Kong, a
magnet for well-heeled shoppers from across Asia. Many of the
city's high-end boutiques have been forced to close during waves of
mass demonstrations since March.
LVMH is so large and has so many brands -- including Louis
Vuitton, Dior, Fendi and Dom Pérignon -- that disruption in one
shopping destination had little impact on its overall results.
Louis Vuitton, the luxury industry's biggest brand, with annual
sales estimated at more than EUR12 billion, "enjoyed a remarkable
performance in all its businesses and in all regions," LVMH
said.
The trade dispute between the Trump administration and China
also seemed to have little impact. Chinese shoppers are the luxury
industry's most important clients, accounting for roughly a third
of global sales.
"This is a testament to the strength of the LV and Dior brands,
as well as a reality check on the current global luxury demand
momentum," Bernstein analyst Luca Solca wrote.
Hong Kong is particularly important for the Swiss watch
industry, in most years ranking as its biggest market. In 2018,
Hong Kong accounted for 14% of total Swiss watch exports. This
year, the protests have had an impact, cutting exports by 6%
through August.
The industry appears to be making up the slack in other markets,
particularly mainland China. Swiss watch exports to China are up
14% this year. LVMH, whose main watch brands are TAG Heuer, Hublot
and Bulgari, said watch and jewelry sales in the latest quarter
rose 5% from a year earlier.
Write to Matthew Dalton at Matthew.Dalton@wsj.com
(END) Dow Jones Newswires
October 11, 2019 02:47 ET (06:47 GMT)
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