Luxury Shares Jump After LVMH Powers Through Hong Kong Protests -- 2nd Update
October 10 2019 - 8:14AM
Dow Jones News
By Matthew Dalton
PARIS -- Strong third-quarter results at LVMH Moët Hennessy
Louis Vuitton SE buoyed shares across the luxury sector Thursday,
easing fears that months of protests in Hong Kong and U.S.-China
trade tensions would make a dent in global sales of high-end
brands.
Paris-based LVMH, the world's biggest luxury company, said
revenue for the quarter was EUR13.3 billion ($14.6 billion), an 11%
increase after adjusting for the impact of currency fluctuations
and acquisitions. LVMH's shares were up more than 4% in afternoon
trading, while the news boosted shares of rivals Kering SA by 3%,
Burberry by nearly 2% and Cie. Financière Richemont SA and Prada
SpA by 1%.
Investors had worried that the protests against China's
encroachment on the autonomy of Hong Kong, a magnet for well-heeled
shoppers from across Asia, would hurt revenue. Many of the city's
high-end boutiques have been forced to close during repeated waves
of mass demonstrations since March.
But at least for LVMH, the company is so large and has so many
brands - -- including Louis Vuitton, Dior, Fendi and Dom Pérignon
-- that disruption in one shopping destination had little impact on
the overall conglomerate. Louis Vuitton, the luxury industry's
biggest brand, with annual sales estimated at more than EUR12
billion, "enjoyed a remarkable performance in all its businesses
and in all regions," LVMH said.
The trade dispute between the Trump administration and China
also seemed to have little impact. Chinese shoppers are the luxury
industry's most important clients, accounting for roughly a third
of global sales.
"This is a testament to the strength of the LV and Dior brands,
as well as a reality check on the current global luxury demand
momentum," wrote Bernstein analyst Luca Solca.
Hong Kong is particularly important for the Swiss watch
industry. In most years, it is the industry's biggest market; it
accounted for 14% of total Swiss watch exports in 2018. This year,
the protests have had an impact, cutting exports by 6% through
August.
But the industry appears to be making up the slack in other
markets, particularly mainland China. Swiss watch exports to China
are up 14% this year. LVMH -- whose main watch brands are TAG
Heuer, Hublot and Bulgari -- said watch and jewelry sales rose 5%
in the quarter compared with a year earlier.
Write to Matthew Dalton at Matthew.Dalton@wsj.com
(END) Dow Jones Newswires
October 10, 2019 08:59 ET (12:59 GMT)
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