LVMH delivers growth where decline was expected
LVMH’s core Luxury Brands, Louis Vuitton and Christian Dior, surprised analysts. While relying heavily on exclusive physical distribution, the Fashion & Leather division achieved +12% growth in the third quarter to September when most expected flat to negative. Indeed, positive surprises from LVMH’s highest margin (>30%) divisions which account for 57% of sales mean that cash generation is back on a growth track.
Strongly recovering mainland China luxury demand is the driving force behind the surprise. LVMH Managers also report that Golden Week demand, one of the main holiday and shopping peak for Chinese consumers, has been “strong” which bodes well for the coming Q4. The news has not been lost on other GT Luxury Consumer fund traditional luxury investments all of which over-index in China where consumer habits more quickly normalized post pandemic and returned on the long term structural trend trajectory. These holdings are currently up >3% while LVMH is up >6%.
LVMH is a core holding of the GT Luxury Consumer and GT Managed funds.
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