LVMH slightly misses Q1 revenue estimates but shares rise on 'broadly ok' report

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LVMH slightly misses Q1 revenue estimates but shares rise on 'broadly ok' report
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LVMH Moët Hennessy Louis Vuitton (LVMUY (OTC: LVMUY )) reported a slight dip in first-quarter revenue, undershooting market expectations as demand for its high-end products waned, the company revealed on Tuesday.

For the quarter ending in March, revenue dropped by 2% year-over-year to €20.7 billion ($22 billion), narrowly missing the €21 billion ($22.3 billion) forecast by analysts as per FactSet.

Importantly, the company noted a 3% increase in organic revenue, which adjusts for external influences like currency movements. Reported revenue was down 4% due to those currency impacts.

Shares rose 2.6% in Paris trading on Wednesday.

Segment-wise, the watches and jewelry division saw a 5% decline in sales, while the fashion and leather goods sector recorded a 2% decrease.

The wines and spirits division experienced the most significant downturn, with sales plummeting 16% compared to the same quarter the previous year.

Global purchases of Louis Vuitton products by Chinese shoppers rose about 10%, especially in Japan and Europe, as travel outside mainland China picked up.

Commenting on the report, Bernstein analysts said LVMH’s report was “broadly ok.”

“Depending on the tone of the update, considering the c.10% share price retrenchment from recent peaks, and the fact that buyside may be a touch lower than the sellside, this level should be taken in stride by the market and support the stock,” analysts wrote.

“We stick to our “soft landing” scenario for FY24E and take this update as a sign that this remains the most likely shape of things to come. Going into 2Q24E - and even more 2H24E - comps should become significantly easier, ushering higher growth,” they added, reiterating an Outperform rating on LVMH stock.

Goldman Sachs analysts shared similarly bullish comments, saying LVMH delivered “a solid performance” in the quarter in spite of “a tough base of comparison and the key positive in our view is that management confirmed the Chinese cluster grew +10% cFX in Q124 within F&L.”

“With weakness in domestic spending (-6% Asia-Pac for the group), this demonstrates the
appetite of consumers to purchase on high-end discretionary goods whilst abroad,” Goldman added.

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