LVMH, the world’s largest luxury group, experienced a surge in its shares by more than 12% on Friday morning following its announcement of higher-than-expected sales for the fiscal year 2023 and an increase in its annual dividend.
The conglomerate, renowned for brands such as Louis Vuitton, Moët & Chandon, and Hennessy, reported sales totaling 86.15 billion euros ($93.34 billion) for 2023, surpassing consensus forecasts and reflecting a robust 13% organic growth compared to the previous year. Notably, organic revenue saw a 10% increase in the fourth quarter alone.
The stellar performance was largely driven by a remarkable 14% annual growth in the fashion and leather goods sector and an 11% rise in perfumes and cosmetics. However, the wines and spirits category experienced a slight setback, with a 4% decline.
Bernard Arnault, Chairman and CEO of LVMH, stated, “Our performance in 2023 illustrates the exceptional appeal of our Maisons and their ability to spark desire, despite a year affected by economic and geopolitical challenges.” He said, “While remaining vigilant in the current context, we enter 2024 with confidence, backed by our highly desirable brands and our agile teams.”
While the luxury sector faced headwinds towards the end of 2023 due to geopolitical and macroeconomic uncertainties impacting consumer spending, LVMH’s robust performance provided a beacon of optimism for investors. The company reached a milestone in April 2023 by becoming the first European firm to surpass $500 billion in market value. However, a subsequent decline in share prices temporarily dimmed its status as Europe’s largest company.
The positive momentum from LVMH’s stellar results reverberated across the luxury sector, buoying investor sentiment. Even amid challenges, including a profit warning issued by British luxury brand Burberry earlier in the month, luxury stocks saw a broad uptick.
Javier Gonzalez Lastra, portfolio manager of the Tema Luxury ETF, noted that investors are closely monitoring the luxury sector’s earnings cycle and anticipate continued challenges in the first half of 2024 due to high annual comparisons from the previous year’s exceptional performance.
Arnault sees potential in LVMH’s partnership with the Paris 2024 Olympics, aiming to strengthen the conglomerate’s global leadership in luxury goods and bolster France’s reputation for excellence on the international stage. With optimism abounding, LVMH’s robust performance signals resilience and enduring appeal in the luxury market landscape.
