Yesterday after the end of the European session, global luxury goods leader Louis Vuitton Moët Hennessy (MC.FR) reported its Q2 results for this year, which brought down the company's shares by 4.3% during today's session and created a fair amount of uncertainty around other companies in the sector. Why did this happen?
The market was spooked by a decline in the company's revenue growth rate in the US market, overshadowing the very good results from China. What is imposing here is the context in which consumers are now reacting to the ongoing monetary tightening in the US, but also in the company's other markets.
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The CB consumer confidence data presented yesterday surprised on the upside. The report for July was expected to show an improvement on the June data. Indeed it did - the headline consumer confidence index rose from 109.7 to 117.0! This is a significant increase - the market expected the main index to jump to 112.0. The improvement was mainly due to an increase in the expectations sub-index from 79.3 to 88.3. The current situation sub-index rose from 155.3 to 160.0.Source: XTB
On the other hand, however, the latest retail sales reading surprised on the downside. Of course, we continue to see an increase in sales, but at the same time it shows that consumer strength is somewhat lower. The monthly data came in at 0.2% m/m (expected: 0.5% m/m; previous: 0.3% m/m) and core sales: 0.2% m/m (expected: 0.3% m/m; previous: 0.1% m/m). Source: XTB
The US alone is not all, however, as for the broad luxury goods market the barometer of momentum for many years has proven to be the Asian market. Source: Bloomberg
Looking at regional data, data from the US and Asia (excluding Japan) came in below the average forecasts of analysts surveyed by Bloomberg. On the other hand, comparing the difference between the actual results and the average and comparing this with the standard deviation of the forecasts, it can see that the actual surprise of these readings was negligible. Considering the median, the difference turns out to be even smaller. Source: Bloomberg
Analysing the company's exact performance by sector, we can see that revenue growth has slowed, which has undermined sentiment around the company somewhat. Source: LVMH
Moreover, results from the most profitable part of LVMH's business, namely fashion and leather goods, failed to meet analysts' expectations. Source: LVMH
The luxury sector of the company's business is seeing sharp declines today against the results reported by the company. Kering (KER.FR) will report its results tomorrow. Source: xStation
LVMH (MC.FR) shares are currently losing nearly 4.65% and are testing the support set by the Fibo retracement of 38.2% of the upward wave initiated at the beginning of 2023. Source: xStation 5'
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