Christopher Johnson: Shares of LVMH MC, the Paris-listed luxury goods giant that owns the Louis Vuitton and Dior brands, took a hit after disappointing third-quarter sales.
LVMH shares plunged nearly 7% on Wednesday’s announcement, weighing on France’s CAC40 index, which fell 1%.
The luxury goods giant’s third-quarter sales were 19.08 billion euros, down from 19.96 billion euros in the same period last year.
The main disappointment came from the company’s Fashion & Leather Goods division, which is the most important in terms of LVMH’s performance.
The company’s sales in Asia ex-Japan fell 16% in the third quarter, while sales in the United States remained weak. However, sales growth in Japan remained at double digits.
Luxury goods groups have been hit hard by declining consumer confidence in China.
Chinese shoppers have cut back on spending on luxury goods following the pandemic due to concerns about the country’s dire economic outlook and a damaged housing market.
Despite this, Morningstar maintains its fair value estimate for the stock at €650, taking into account the weak third quarter sales.
LVMH is currently trading at 607.20 euros and has a quarterly dividend of 3.25 cents.
