By Joshua Kirby
LVMH Moet Hennessy Louis Vuitton SE reported results for the first six months of the year on Tuesday. Here’s what we saw:
SALES: The French luxury goods giant posted total revenue of €36.73 billion in the January-June period, up 21% in constant currency from the same period a year ago. Second-quarter sales came in at 18.73 billion euros, up 19% year-on-year and beating a forecast of 17.42 billion euros, according to a survey of analyst estimates compiled by FactSet.
EARNINGS: Operating profit came in at 10.24 billion euros, 34% higher than the year-ago period, with a contribution of 7.51 billion euros from the core fashion and leather products business. That beat analysts’ expectations for 9.57 billion euros in group operating profit, according to FactSet.
WHAT A LOOK:
-CHINA: Sales in Asia rose just 1% year-on-year amid pandemic-related restrictions in China. The situation is “painful,” with little visibility of a recovery in the world’s biggest luxury market, chief financial officer Jean-Jacques Guiony said on a call after the results. However, demand trends suggest that recovery should be rapid as soon as the sanitary situation allows, Mr. Guiony said.
-STRONG PERFORMANCE: As expected, the group’s growth was driven by a strong performance in the fashion and leather goods division, home to megabrands Dior and Louis Vuitton. Second-quarter profit growth of 33% in the high-margin business led to group operating profit that defied consensus. This fundamental momentum, despite headwinds in China, has further cemented LVMH’s position as a post-pandemic winner, Jefferies analysts Flavio Cereda and Kathryn Parker said in a postpress note.
-MARKET REACTION: Shares reacted in a muted manner to the results, trading slightly higher on Wednesday at 628.70 euros. A rally in the currency should lead to improvements in consensus estimates for full-year earnings, but for the broader sector, uncertainty in China persists and macroeconomic clouds loom, Citi analyst Thomas Chauvet said in a note.
Write Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby
