Luxury Stocks Slip on China Fears -- Update
10 Octobre 2018 - 1:07PM
Dow Jones News
By Anthony Shevlin and Cristina Roca
European luxury stocks fell Wednesday after results from LVMH
Moët Hennessy Louis Vuitton SE failed to allay concerns about a
potential slowdown in spending by Chinese consumers.
The French luxury-goods company reported third-quarter revenue
of EUR11.38 billion ($13.08 billion), below analysts' expectations
of EUR11.56 billion. It said organic revenue growth was 10%,
marking a slowdown from 11% in the second quarter and 13% in the
first quarter.
Some analysts had said before the results were released late
Tuesday that LVMH, and others in the sector, would need to beat
expectations to reassure investors that an economic slowdown in
China isn't dampening spending by Chinese shoppers -- the luxury
industry's most influential clientele.
Shares in LVMH -- the world's biggest luxury-goods company by
sales and a bellwether for the industry -- dropped 4% in early
trading in Paris. Elsewhere in the sector, Gucci parent Kering SA
fell 5%, Burberry Group PLC was down 4% and Hermes International
SCA dropped 4%.
Investor concerns were compounded by a research note from Morgan
Stanley, in which the bank's analysts said they believed Chinese
consumer confidence -- traditionally a leading indicator for
European luxury companies -- has peaked, with a weaker trend
expected in the second half.
Analysts at Bryan Garnier said LVMH's figures were reassuring,
but noted a slight deceleration in overall sales compared with the
second quarter.
LVMH owns leather-goods giant Louis Vuitton, couture house
Christian Dior, high-end jeweler Bulgari, cognac label Hennessy and
dozens of other brands.
On Tuesday, the company said its fashion and leather-goods
division, which includes Louis Vuitton and accounts for more than a
third of total revenue, posted 14% organic sales growth in the
third quarter. Sales at its perfumes-and-cosmetics division were up
11% in the three months and its watches-and-jewelry arm was up
10%.
LVMH didn't specifically address Chinese consumer spending in
its statement but executives are scheduled to hold a conference
call to discuss the results later Wednesday.
(END) Dow Jones Newswires
October 10, 2018 06:52 ET (10:52 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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