LVMH Shares Decline to Low Levels

LVMH Moet Hennessy Louis Vuitton SA declined to the lowest level in last 5 months in Paris trading as it announced that Asian demand has been weak and this has contributed to the slowest growth in sales of leather and fashion products within the last 3 years. Jean-Jacques Guiony, the Chief Financial Officer of LVMH, stated that the sales at Louis Vuitton have been kind of flattish in China in the 1st quarter. The shopper numbers are down in most of the shopping malls. Incidentally, Louis Vuitton is the largest brand of the company. Due to the increased prices, spending by the Japanese tourists experienced a fall as well. Shares of LVMH declined by 3.8% on today.

Guiony added further that in the current scenario, the company is missing demand from the Asian countries and this is proving to be a key factor in declining sales. Guiony commented that the sales figures from Asian region are important as consumers from the same account for around 50% of the sales of Vuitton. In Japan, the prices of LVMH products were increased by 12%. On the other hand, in the other parts of the world, the prices were increased by 3% to 4.5%.

On yesterday, LVMH published a report stating that the growth for the 1st quarter has been of 3%, if the acquisitions and currency swings are excluded. This marks the weakest performance for the company since the last quarter of 2009. When it comes to forecasts, analysts predicted a gain of 5%.

According to the Analyst of UBS AG, Eva Quiroga, the slowdown in the 5 most profitable divisions of LVMH will have an adverse impact on the margins of the company. Incidentally, Quiroga currently has a neutral recommendation on the shares of LVMH.

At this time, each share of LVMH costs 126.25 Euros which is the lowest figure since 16th November. Other similar companies, such as Salvatore Ferragamo SpA in Milan and Burberry Group Plc. in London experienced declines as well. While for the former, the decrease was of 3.4%, the latter went down by 1.4%.

Chief Executive Officer of LVMH, Bernard Arnault, stated that the company has decided to open fewer stores in the next few months. With Vuitton, the company wants to make the brand even better than it currently is and the primary goal is not of growing revenue.

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