LVMH shares soar on China recovery hopes, lifting European luxury sector by US$80 billion
PARIS: Shares in French luxury giant LVMH jumped as much as 14 per cent on Wednesday (Oct 15), their biggest daily gain in over two decades, after stronger-than-expected sales and signs of improving demand in China reignited investor optimism across the luxury sector.
The rally added nearly US$80 billion (S$110 billion) in market value to Europe’s leading luxury stocks, according to Reuters calculations.
LVMH, the world’s largest luxury group and owner of brands including Louis Vuitton, Moët & Chandon and Dior, reported its first quarterly sales rise this year, beating analyst forecasts.
RIVALS RIDE THE WAVE
Hermès, Kering, Richemont, Burberry and Moncler all gained between 5 and 9 per cent, as investors bet that the industry may finally be emerging from a two-year slump.
“The sales figures indeed surprised investors positively and are likely to keep the sector’s share price momentum alive,” said Stefan Bauknecht, equity portfolio manager at DWS.
Bernstein noted that sales exceeded expectations across all of LVMH’s divisions: spanning fashion, jewellery, beauty, spirits and hospitality.
Still, some analysts urged caution. Jefferies warned it may be premature to call a sector-wide rebound, suggesting LVMH’s strong performance could be “idiosyncratic” rather than indicative of a broader recovery.
CHINA DEMAND IMPROVES
Sales in mainland China, traditionally a key growth driver for luxury brands, turned positive for the first time this year, with shoppers drawn to new retail experiences such as Louis Vuitton’s ship-shaped boutique in Shanghai.
Spending by travelling Chinese consumers also rose, although remained below pre-pandemic levels.
Chinese demand had been hit hard by a prolonged property crisis and uncertainty from the global trade war. The country’s consumers account for roughly one-third of global luxury sales for both LVMH and the wider sector.
RETURN TO GROWTH REASSURES INVESTORS
LVMH’s third-quarter results reassured markets, said Ariane Hayate, European equity fund manager at Edmond de Rothschild, pointing to growth driven by creative retail initiatives in China.
The group’s fashion and leather goods division which is its main profit engine has improved from the previous quarter, though sales were still down 2 per cent year-on-year.
Chief Financial Officer Cécile Cabanis warned that economic uncertainty and unfavourable exchange rates would continue to weigh on results in the fourth quarter.
UBS forecast 4 per cent organic sales growth for the luxury sector in 2026, expecting a stronger recovery later next year as new designer collections reach stores.
($1 = €0.8602)
