LVMH Moet Hennessy Louis Vuitton SA (MC), the world’s largest luxury-products maker, fell the most in more than two years after slowing fashion and leather-goods growth suggested that efforts to turn around its biggest brand have yet to take hold.
The stock dropped as much as 6.5 percent to 135.5 euros in Paris trading, the steepest decline since Sept. 22, 2011. Revenue at LVMH’s fashion and leather-goods division climbed 4 percent on an organic basis in the first nine months of the year, the Paris-based company reported late yesterday in a statement. The rate slowed from the first-half’s 5 percent gain and trailed the 6 percent median estimate of 11 analysts.
“The market was expecting F&L trends to accelerate further given a much easier comparative, pricing effects and early signs of Vuitton’s repositioning,” said Thomas Chauvet, an analyst at Citigroup. He estimates the fashion and leather-goods unit’s organic sales probably rose 3 percent last quarter with the Louis Vuitton brand’s growth at about 2 percent.
Total third-quarter revenue advanced to 7.02 billion euros ($9.5 billion) from 6.9 billion euros, LVMH said yesterday. Analysts predicted 7.24 billion euros, according to the median of 15 estimates compiled by Bloomberg. Sales climbed 8 percent excluding acquisitions, disposals and currency moves, missing the 10 percent gain analysts had expected.
LVMH is boosting investment in some of its smaller fashion brands and buying stakes in others to help offset slowing growth at Vuitton, its biggest source of revenue and profit. It’s also shuffling Vuitton’s management, with Delphine Arnault joining as executive vice president and artistic director Marc Jacobs leaving after 16 years to focus on his own label.
Fewer Logos
The slowdown “confirms our view that it will take time (likely at least another 12 months) for initiatives to bolster the leather handbag offer at Louis Vuitton to produce tangible results,” said Allegra Perry, an analyst at Cantor Fitzgerald.
Vuitton is slowing retail expansion, including more precious materials in its ranges and adding products with fewer logos in an effort to appeal to the wealthiest shoppers. In April, LVMH reported organic growth of 3 percent in first-quarter fashion and leather goods sales, the weakest performance since the fourth quarter of 2009.
The company, which published its sales numbers after the French market closed yesterday, said it remains confident for 2013, even in the face of an uncertain economic environment in Europe.
“The group will continue its proactive strategy centered on innovation and targeted geographic expansion in the most promising markets,” LVMH said in the statement.
Uncertain Environment
Sales growth is slowing at LVMH as luxury-goods demand wanes globally. Burberry Group Plc (BRBY), the U.K.’s largest luxury-goods maker, expects the business climate to remain “uncertain,” Chief Executive Officer Angela Ahrendts said yesterday as she announced her departure after almost eight years at the company.
Growth also slowed at LVMH’s perfume and cosmetics unit during the third quarter. Nine-month organic revenue rose 5 percent after the first-half’s 6 percent increase. Analysts predicted a 7 percent gain in the nine-month period.
Growth accelerated however at the wines and spirits and watches and jewelry divisions, while the selective retailing unit, which includes the Sephora beauty chain and DFS duty free stores, maintained its 19 percent growth pace.
To contact the reporter on this story: Andrew Roberts in Paris at aroberts36@bloomberg.net
To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net
0 comments:
Post a Comment