European Luxury Stocks Fall After LVMH Results Miss Forecasts

By Adam Whittaker

Shares in European luxury companies fell after weaker-than-expected results from industry bellwether LVMH confirmed investors' concerns about stalling demand for luxury goods in China.

At 0902 GMT, shares in LVMH were down 4.7%, shedding more than 13 billion euros ($14.11 billion) in market value. This took the stock's loss in the year to date to 10%.

Gucci owner Kering, which is set to report its results on Wednesday, were down 3.1%, while Hermes International, which reports on Thursday, fell 1.1%. Cartier owner Richemont traded 1.8% lower. Smaller luxury companies like Moncler, Burberry and Brunello Cucinelli were down 1% or more.

LVMH's results, published late Tuesday, showed the world's largest luxury-goods company wasn't immune to weaker Chinese demand. The company, which owns Louis Vuitton and Dior, missed revenue expectations and said organic sales in its Asian market--which is dominated by China and excludes Japan--dropped 14% over the three-month period ending on June 30.

While the results show pockets of demand for luxury goods among the Chinese ultra-wealthy, they confirm weaker demand among the Chinese middle class--a trend reported by smaller and less-exclusive brands like Burberry, Swatch Group and Hugo Boss.

The luxury sector seems likely to remain out of favor with investors after LVMH's results, Citi analysts Thomas Chauvet and Lorenzo Bracco wrote in a note to clients.

"The lack of visibility about [the second half], other than the 'easier comparatives' argument, is unlikely to improve investor sentiment on the luxury sector and its bellwether LVMH," the analysts said.

Write to Adam Whittaker at adam.whittaker@wsj.com

(END) Dow Jones Newswires

July 24, 2024 05:34 ET (09:34 GMT)

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