LVMH 4Q Growth Driven by Fashion Houses as Investor Focus Turns to Coronavirus -- Earnings Review
29 Gennaio 2020 - 05:41PM
Dow Jones News
By Cristina Roca
LVMH Moet Hennessy Louis Vuitton SE reported 2019 results on
Tuesday after the Paris market closed. Here is what we watched:
REVENUE REVIEW: The luxury-goods giant said revenue was 15.27
billion euros ($16.82 billion) for the last quarter of the year,
roughly in line with analysts' expectations of EUR15.21 billion,
according to a FactSet estimate.
NET PROFIT REVIEW: Net profit for 2019 rose to EUR7.17 billion,
a record high but slightly below a EUR7.32 billion consensus
estimate provided by FactSet.
WHAT WE WATCHED:
-FASHION & LEATHER GOODS DROVE GROWTH: As most analysts had
expected, fourth-quarter sales growth was driven by the
fashion-and-leather goods category, although its 15% organic growth
rate was slower than in the previous quarter. This may have
disappointed investors who have grown used to the division topping
expectations every quarter, J.P. Morgan Cazenove analysts said.
Still, the result is a "spectacular outperformance" over other
luxury players and was achieved against headwinds in Hong Kong and
Japan, as well as product shortages at the Louis Vuitton brand, the
brokerage said.
-WATCHES & JEWELRY, WINES & SPIRITS WEAKNESS: LVMH's
wine-and-spirits division posted 3% organic revenue growth in the
fourth quarter, which was weaker than expected, RBC analysts said.
Company management said this was largely due to restocking in the
third quarter, which had a negative impact on the final quarter,
and that excluding this impact, the division would have had growth
of about 7%, RBC analysts said. The watches-and-jewelry division
was weak as expected, with the drag from the Hong Kong protests and
a VAT increase in Japan disproportionately affecting this
category.
-CORONAVIRUS: Chairman and Chief Executive Bernard Arnault said
it was still very early to say what the impact of the coronavirus
epidemic would be, but struck a rather reassuring tone during the
2019 results presentation. "If it lasts a couple of months or if
it's resolved over the next two, two-and-a-half months, then it
won't be all that bad. I mean, if it were to last two years, it
would be a totally different matter," he said. Company management
also said variable costs are high in China, meaning LVMH would be
able to adjust its cost base if there is a drop in business
there.
Write to Cristina Roca at cristina.roca@dowjones.com
(END) Dow Jones Newswires
January 29, 2020 11:26 ET (16:26 GMT)
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