» » LVMH shares hit record high as China demand boosts luxury group

LVMH shares hit record high as China demand boosts luxury group

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The group, which owns other labels, including Christian Dior and Krug Champagne, sets the bar high for competitors who pursue the same clientele, although not everyone gets the same benefit as Chinese spending moves from the capitals of foreign stores to homes.
The LVMH's solid impulse, however, was still enough to raise stocks across the sector, despite fears of a deterioration in the Chinese economy.

French groups rose 4.3 percent in the second half of the day after they reached a record high early in the day, which helped raise the rankings of such companies as the owner Gucci Kering, Hermes, Burberry and Moncler.
LVMH reported ahead of schedule on Wednesday. First-quarter revenue rose 16 percent to 12.5 billion euros ($ 14.10 billion), up 11 percent over the same period, eliminating currency fluctuations and the effect of acquisitions or disposals.

In general, slower growth is expected when LVMH competitors report numbers for the first quarter, and the group "should be above the average this year,” analysts say at SocGen, as the bank raised the company's rating to "buy” from "hold”.

LVMH’s bullish comments about the appeal of its brands to Chinese consumers were even more supported by its actions during a conference call with analysts on Thursday.
"In the case of the Chinese, the business is really getting stronger and stronger,” said CFO Jean-Jacques Gioni about LVMH Louis Vuitton, the main driver of profits, adding that it also sold well to Japanese and American customers.

Guiony confirmed that Chinese buyers, who still mostly buy luxury goods on foreign trips and which account for more than a third of sales in this sector, are gradually spending more on home lawn, which is partly stimulated by the government’s efforts to reduce fuel consumption by reducing VAT or import duties.

Shopping in nearby areas, such as Hong Kong or Macau, was hit hardest by this trend, he added, while Chinese spending in Europe remained high, despite constant street protests in France.

"There is stability in Europe, demand is growing in China, and a decline is observed outside China in the rest of Asia,” said Gioni.


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