LVMH Delivers Hopeful News From China Despite 1Q Revenue Fall -- Sales Review
17 Aprile 2020 - 01:15PM
Dow Jones News
By Cristina Roca
Luxury-goods conglomerate LVMH Moet Hennessy Louis Vuitton SE is
reported first-quarter revenue on Thursday April 16. Here's what we
watched:
SALES REVIEW: The owner of Louis Vuitton said revenue fell 15%,
or 17% on an organic basis. Analysts at RBC, Bernstein and
Jefferies said this was broadly in line with their expectations.
The company warned at the end of March that its first-quarter
revenue would fall 10%-20% as measures to stem the spread of the
coronavirus hit its sales.
WHAT WE WATCHED:
-FIRST READ ON 1Q FOR LUXURY GOODS: LVMH was the first large
luxury-goods company to report first-quarter revenue, thus giving
an indication of what is to come from other sector players. LVMH's
release wasn't worse than feared, and the company had some
encouraging news on demand in mainland China. Still, investors need
to keep in mind that stronger luxury-goods companies like LVMH will
likely perform better against the coronavirus headwind, Bernstein
analysts said, suggesting other companies could take a bigger hit
from the virus.
-CURRENT TRADING IN CHINA LIFTS HOPES: LVMH shares rose sharply
on the opening Friday, and JPMorgan Cazenove analysts believe
management's comments around the recovery in demand from the
all-important Chinese clientele had a lot to do with this.
LVMH management said sales for its biggest brands Louis Vuitton,
Dior and Sephora started to grow in China in the second half of
March and gathered speed in April. "In April, for the large brands,
we've seen very high growth rates in mainland China," CFO
Jean-Jacques Guiony said, "sometimes in excess of 50%."
This sign of Chinese customers' strong appetite for luxury
following two months of lockdown offers hope to sector players.
However, this surge doesn't completely compensate for the collapse
of Chinese spending abroad, and JPMorgan Cazenove analysts warn
that LVMH is likely outperforming most of its peers when it comes
to lapping Chinese consumers' pent-up demand.
-DIVIDEND: The French company said it will cut its proposed
dividend for 2019 by 30%, joining a growing number of companies
that have reduced or cancelled their dividends amid the coronavirus
crisis.
Write to Cristina Roca at cristina.roca@dowjones.com;
@_cristinaroca
(END) Dow Jones Newswires
April 17, 2020 07:00 ET (11:00 GMT)
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