LVMH shares soared after the report and pulled the entire European luxury sector with it
The European Luxury Goods Producers Index posted its biggest daily gain since January
Shares in luxury giant LVMH jumped 13% on October 15 after the company reported its first sales growth this year and promised to strengthen its leadership in the global luxury goods market.
The unexpectedly strong results of LVMH pushed up the entire European sector of luxury goods manufacturers: the Stoxx Europe Luxury 10 index soared by 6.8% - the largest daily increase since January, reports CNBC. Shares of Christian Dior, which owns a controlling stake in LVMH, rose by about 13%, securities of British fashion house Burberry added 6.4%, and quotations of the owner of Gucci, the company Kering, rose by 6%.
What was the signal to investors?
French luxury conglomerate LVMH owns a broad portfolio of brands, including Louis Vuitton, Tiffany & Co., Christian Dior and Moët & Chandon, and is considered a barometer of the global luxury goods market, CNBC notes. The sector has faced a prolonged downturn since the end of the post-pandemic boom. Price increases, which for some time supported the profits of luxury brands, eventually reduced customer interest in expensive bags - especially among less affluent customers, writes Reuters.
However, LVMH's third-quarter report signaled a return of optimism among investors, the agency said.
The company said its results in the first nine months of the year were negatively impacted by currency fluctuations, trade tensions and the economic downturn, but managed to demonstrate "resilience and strong innovation momentum" in the third quarter.
LVMH reported that its organic sales (revenue excluding non-recurring factors such as write-downs or acquisitions) rose 1% to €19.1 billion in the third quarter - the first time after two consecutive negative quarters. All of the holding company's divisions performed better than Wall Street forecasts, including the key fashion and leather goods business.
A week before the report was published, analysts polled by Reuters gave a series of positive outlooks, noting that luxury brands' reliance on more affordable goods and what Morgan Stanley called a "surge in creativity" from new designers at most houses could signal that the worst period is behind them.
This article was AI-translated and verified by a human editor
