LVMH leads luxury shares rally following record 2023 results despite market slump

By Louis Goss

LVMH Moet Hennessy Louis Vuitton's Paris listed shares surged on Friday following the luxury firm's decision to hike its dividend on the back of record 2023 results, in a rally that lifted shares across the luxury sector amid a slowdown that has pummeled the industry in recent months.

The Paris headquartered conglomerate, which owns top brands including Christine Dior and Tiffany & Co, saw its sales surge 10% in the fourth quarter, to EUR23.9 billion, in an uptick that saw its full-year revenue reach all-time highs of EUR86.2 billion.

Shares in LVMH (FR:MC) that are listed on the Euronext Paris stock exchange rallied 8% on Friday having lost 8% of their value over the previous 12 months.

LVMH's results saw its net income increase 8%, to EUR15.2 billion, as its sales grew across all segments of its business aside from its wine & spirits division, which includes cognac brand Hennessy and champagne seller Moët & Chandon.

Luxury goods companies including Hermes International (FR:RMS), Kering (FR:KER), Christine Dior (FR:CDI), and Prada (HK:1913) also saw their share prices lifted by the rally, following a tough year for the sector which has been hard hit by a drop in consumer spending following the end of a boom during COVID-19.

LVMH CEO Bernard Arnault said the company is now entering 2024 with "confidence," despite signs that growth in the company's sales had started to slow in the second half of 2023 in the face of an increasingly uncertain macroeconomic and geopolitical environment.

The slowdown in the latter half of 2023 saw LVMH's sales grow at rates of just 9% in the third quarter and 10% in the final three months of 2023, compared to bumper rates of 17% in both the first and second quarter of the year.

In a call with investors, Arnault, however, said he expects LVMH's sales will be boosted in 2024 by the lowering of interest rates and the U.S. election cycle which sometimes makes the market more dynamic.

LVMH's results follow Arnault's decision to nominate his two sons, Alexandre, 31, and Frédéric, 29, for positions on the luxury conglomerate's board of directors, in a move that is set to further consolidate the family's control over the company.

The company said it would also call on the board to hike LVMH's dividend, from rates of EUR7.50 a share to EUR13 a share.

Citi analysts led by Thomas Chauvet said they expect LVMH's sales will continue to rise at a low-single-digit percentage over 2024. "This should be enough to support the shares near-term which have lagged slightly this year to date and in the past 3 months," Citi's analysts said.

-Louis Goss

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01-26-24 0549ET

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