Forecasts for LVMH

To try to advance the trend, let’s focus on the real thermometer of the sector (for its size): LVMH. The French giant has a presence in most of the luxury business, so it serves well to try to anticipate the trend for the industry. Looking at the average figures expected by analysts, LVMH sales would grow 17% in the third quarter to €8.6 billion.

This figure is obviously favorable, anticipating a good quarter for the sector, but also allows us to draw certain conclusions

• Sales growsignificantlybut to a lesserextent than in theprevious quarter, whenincreased by over 20%. This is mainly dueto Asia andJapan(whichis hurtbyan unfavorablecomparisonwith 12 monthsbefore)
• Europeanluxury sectoris profiting fromthe weakness of theeurocompared to the samequarter lastSpecifically, inthe second quarter ofthis year60% of the LVMH´s sales growthwas duesolelyto the favorablecurrency exchange. Extrapolatingthis to thethird quarter, the expected revenue growthof 17%would due tothe exchange rate(10%) and the real revenues growth(7%).

• Business which would show the bestperformance would befashionand leather (sales grow over 30%), while divisionsof beverages (wines and spirits) would increase atdouble-digit rates compare to adecrease of 7% last year.
• By brand,the market expectsgood performancefromLouis Vuitton, Bulgari and Sephora, while Donna Karan, Marc Jacobs and DFSwould show.

Given all this, the market consensus points to a sales growth of European luxury industry companies in the double-digit (over 10%), while globally this increase would be 8%. This represents a slight slowdown from the previous quarter, but in any case it is a good figure considering the decline in business that is occurring in China, one of the main markets of the luxury industry.