LVMH: Happiness for the Markets

Vuitton Moet Hennessy, known as LVMH, has beaten analysts' forecasts in the fourth quarter thanks to the positive developments in its main geographical regions.

Leeson. 03/02/2016

The bigger, the better. This ultimate could be perfect for Louis Vuitton´s parent company, which has been able to beat forecasts in the fourth quarter thanks to its size, which allowed it to leverage the diversification of its business, avoiding storms that have plagued its competitors, mainly in Asia

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In the last quarter of 2015, revenue rose 12% to €10.37 billion. In addition, the organic growth of the firm was 5%, above the 3.9% expected by the market. Sales in Japan increased by 12%, while in Europe the increase was 6% and in the US was 5%. By divisions, fashion and leather grew by 3% in the last quarter, triple than expected, while the jewelry and watches division also grew by 3%, although disappointing the market, which expected more than doubled that figure. This division has especially suffered the Asian crisis, which has also been a cruel toll on competitors such as Swatch Group.

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The great advantage of the French giant is precisely its size. Although as we mentioned division of watches and jewelry had a very weak performance, it has been offset by other brands such as Celine, Christian Dior and Moët & Chandon , which have had a quite positive quarter. The company warned that 2016 comes loaded with uncertainty, but in any case it expects to outperform the sector again.

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The stock market has been very optimistic with the results. It shares rose more than 6% after the news, recovering nearly half of its losses in the last six months. Despite the market situation, LVMH is up 9% in the last twelve months. It benefits from its size and its safe-haven status in the sector. It is worth €73 billion currently.

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Disclosure: The Luxonomist is not responsible for the views expressed in the article. The text was written freely expressing ideas, without receiving any compensation. The author has no business relationship with any of the companies whose shares are listed in this article.

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