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LVMH shares opened up 12 percent on Wednesday, a day after the luxury group reported better-than-expected sales in the third quarter with the help of improved demand in China, prompting a sector-wide rally.
The world’s largest luxury group’s shares traded up 13 percent at at 0811 GMT, while rivals Hermes, Kering, Richemont, Burberry and Moncler were up between 5 percent and 7 percent.
Analysts saw the results beat as a good sign for continued recovery, with Bernstein highlighting that sales exceeded expectations across all divisions.
JPMorgan analysts said they believe the overall environment is positive enough to expect a generally better luxury reporting season.
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The rise reported by LVMH on Tuesday represents the first quarter of growth this year for the company, a sector bellwether with operations spanning fashion, alcohol and retail.
LVMH said on Tuesday that sales in mainland China, a traditional growth driver for the sector, turned positive, and that shoppers were responding well to new store experiences, like the ship-shaped boutique set up by Louis Vuitton in Shanghai in June.
Chinese appetite for luxury goods has been dampened by a property crisis, adding to overall gloom in the sector, which has also been buffeted by volatility in its other key market, the United States, where trade wars have brought economic uncertainty.
Third-quarter sales were reassuring, said Ariane Hayate, European equity fund manager at Edmond de Rothschild, citing improvements from “idiosyncratic” elements like Louis Vuitton’s initiatives driving growth in China.
LVMH’s sales in Asia, excluding Japan and dominated by China, accounted for 28 percent of annual turnover last year.
By Alun John; Editor: Amanda Cooper
Learn more:
LVMH Returns to Growth in Third Quarter, but Fashion Sales Lag
The group’s largest division contracted for a fifth quarter, but all other parts of the group improved.
Disclosure: LVMH is part of a group of investors who, together, hold a minority interest in The Business of Fashion. All investors have signed shareholders’ documentation guaranteeing BoF’s complete editorial independence.
