Christopher Johnson: Shares in Paris-listed luxury giant LVMH MC, the owner of the Louis Vuitton and Dior brands, were pummeled by its disappointing Q3 sales.
On the announcement on Wednesday, LVMH shares plunged by almost 7%, weighing on France’s CAC 40 index, which dropped by 1%.
The luxury goods behemoth reported third-quarter sales of €19.08 billion, a drop on the €19.96 billion it recorded a year prior.
The main disappointment came from the firm’s Fashion & Leather Goods division, the most important in terms of LVMH’s results.
The conglomerate’s sales in Asia outside of Japan dropped by 16% in the third quarter, meanwhile sales in the US remained stagnant. Although, sales growth in Japan remained in the double digits.
The luxury group has been hit hard by a drop in Chinese consumer confidence.
Chinese shoppers have reduced their spending on luxury post-pandemic due to concerns around the country’s dire economic outlook and wounded housing market.
Despite all this, Morningstar is maintaining its Fair Value Estimate for the stock of €650, factoring in its weak third quarter sales.
LVMH is currently trading at €607.20 and pays a quarterly dividend of 3.25 cents.
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