Spotlight On Luxury Retail As Louis Vuitton Reports Earnings Thursday

The spotlight on Thursday will be on luxury retailers, as Lvmh Moet Hennessy Louis Vuitton SE LVMHF reports fourth-quarter and full year 2023 earnings.

In early 2023, LVMH (LVMHF) reached its peak following widespread attention to CEO Bernard Arnault‘s net worth surpassing $200 billion. However, the stock has since experienced a significant decline, plummeting by almost 30% from its 2023 highs, leading to its classification as being in a bear market.

This sharp downturn is primarily attributed to apprehensions about the Chinese luxury market and the subsequent normalization of growth following the surge during the pandemic.

Telsey Group’s analysis sees further moderation in luxury spend looking ahead.

The Louis Vuitton Analyst: Telsey Group analyst Dana Telsey maintains an Outperform rating with a 900 euro ($980) price target on Louis Vuitton’s Euronext Paris-listed stock.

The Loius Vuitton Thesis: Telsey notes that Louis Vuitton sales significantly slowed in Q3 of 2023, falling below expectations due to an anticipated slowdown in China and Europe. The U.S. market also remained sluggish. Inflation and higher interest rates caused uncertainty in asset values and the global macro outlook.

Burberry reported disappointing sales, emphasizing a general slowdown in luxury demand, particularly in December.

Related: Burberry Trims Profit Outlook: Are Luxury Goods Losing Charm?

On the other hand, LVMH experienced solid 9% organic growth, with Chinese national spending holding up well, albeit shifting more towards outbound spending. Japan remained a positive market.

Despite slightly below consensus results, the diversified brand portfolio of LVMH demonstrated strength. LVMH controls around 60 subsidiaries that manage 75 prestigious brands.

In addition to Louis Vuitton and Moët Hennessy, LVMH’s portfolio includes Tiffany & Co., Christian Dior, Fendi, Givenchy, Marc Jacobs, Stella McCartney, Loewe, Loro Piana, Kenzo, Celine, Sephora, Princess Yachts, TAG Heuer and Bulgari.

Segment-wise, in the upcoming quarter, Telsey analysts expects:

• LVMH to deliver robust performance in its Fashion and Leather Goods segment, projecting 11% organic sales growth. Despite challenging prior-year comparisons, the segment has consistently outperformed, driven by strong results from Louis Vuitton, Christian Dior, Celine, Loewe, and Fendi.
• The company also announced strategic moves, including the acquisition of Barton Perreira by its eyewear division, Thelios, and the appointment of Michael Burke as Chairman and CEO of LVMH Fashion Group.
• Selective Retailing is expected to see 18% organic growth, benefiting from improved international travel, particularly in Asia and Japan.
• The Watches and Jewelry segment forecasts 9% organic sales growth, with Tiffany and Bvlgari driving robust performance.
• Wines and Spirits expect flat organic growth due to challenges in certain spirits and cognac. Perfumes and Cosmetics anticipate 10% YoY organic sales growth, with strong performance across all regions, driven by iconic fragrances and successful product launches.

LVMHF Price Action: Louis Vuitton stock closed the trading day Wednesday at $747.47 a share at the U.S. stock exchange and at €683.40 at the EuroNext Paris exchange.

Read Next: Musk, Bezos, Buffett Get Richer, Rest Of World Gets Poorer: Here’s A Look At Wealth Inequality Over Last 3 Years

Photo: Shutterstock