Luxury conglomerate LVMH Moet Hennessy Louis Vuitton experienced a notable surge in its Paris listed shares on Friday. This boost followed the company’s decision to increase its dividend after achieving record-breaking results projected for 2023. The rally in LVMH’s shares had a positive spillover effect on the rest of the luxury sector, which has been grappling with a slowdown in recent months.
LVMH, headquartered in Paris and known for owning renowned brands like Christian Dior and Tiffany & Co, witnessed a remarkable 10% sales growth in the fourth quarter, amounting to €23.9 billion. Consequently, the company’s full-year revenue reached an all-time high of €86.2 billion.
After experiencing an 8% decline in value over the previous 12 months, LVMH MC, +10.46% shares on the Euronext Paris stock exchange surged by 8% on Friday.
LVMH’s impressive results led to an 8% increase in net income, totaling €15.2 billion. The company achieved sales growth across all segments of its business, with the exception of its wine and spirits division, which encompasses Hennessy cognac and Moët & Chandon champagne.
The rally also boosted share prices for other luxury goods companies such as Hermes International RMS, +3.47%, Kering KER, +4.56%, Christian Dior CDI, +10.14%, and Prada 1913, +2.24%. This upward momentum provided much-needed relief for the sector, which has been severely impacted by reduced consumer spending following the end of the COVID-19-inspired boom.
LVMH CEO Expresses Confidence Despite Sales Slowdown
The CEO of LVMH, Bernard Arnault, has assured investors that the company is entering 2024 with confidence, despite a noticeable decline in sales growth during the second half of 2023. This slowdown has been attributed to the current uncertain macroeconomic and geopolitical environment.
During this period, LVMH experienced sales growth rates of only 9% in the third quarter, followed by 10% in the final three months of the year. These figures pale in comparison to the impressive rates of 17% achieved during both the first and second quarters of 2023.
In a recent call with investors, Arnault remained optimistic about the future, anticipating that LVMH’s sales would receive a boost in 2024. He cited two primary factors behind this projection: the expected reduction in interest rates and the upcoming U.S. election cycle which typically injects more dynamism into the market.
This positive outlook from LVMH coincides with Arnault’s decision to nominate his two sons, Alexandre (31) and Frédéric (29), for positions on the luxury conglomerate’s board of directors. This move further solidifies the family’s control over the company.
Moreover, LVMH intends to propose an increase in their dividend payout at the board meeting. They plan to raise the dividend from €7.50 per share to €13 per share.
Citi analysts, led by Thomas Chauvet, anticipate that LVMH’s sales will continue to rise at a low-single-digit percentage throughout 2024. They note that this projected growth should support the company’s shares, which have slightly lagged behind this year.
Despite recent challenges, LVMH remains confident in its ability to weather the storm and continue its success in the luxury market.
