Louis Vuitton's LVMH Shares Hits New Record Thanks To Growing Chinese Demand
Shortly after LVMH announced strong first-quarter sales during its latest earnings call, the company's stock prices had hit a record high. According to the company, which owns popular luxury brands such as Louis Vuitton and Christian Dior, its increased sales is partly attributed to China's rising demand for its luxury handbags and high-end fashion products.
In its latest earnings call, LVMH reported a 16 percent increase in revenue totaling to about US$14.10 billion. The revenue increase, which is about 11 percent more compared to the previous year, exceeded initial forecasts.
Meanwhile, LVMH stock prices jumped by around 4.3 percent shortly after its earnings announcement. Shares were trading on Thursday at around €342.80, the highest level since the stock was listed in 1989. The increase shot the company's market value close to US$200 billion. The increase also helped boost other luxury-brand stocks including Hermes, Burberry, and Kering (Gucci).
Following its stellar performance compared to its peers this year, market analysts have changed the rating on the company to "buy" from "hold." The company's statement regarding its performance in China has also helped it sell more shares in the days after its earnings announcement.
According to the company's Financial Director Jean-Jacques Guiony, the company's business in China is really strengthening and its sales in Japan and the United States are also doing very well. Guiony further explains that Chinese buyers who purchase their items during overseas trips account for more than a third of their sales.
China's move to cut import duties and other taxes are also expected to further boost the company's domestic sales. The changes have however had an impact on the company's sales in its popular Asian travel destinations such as Hong Kong and Macau. Chinese buyers who had mostly purchased their products during their trips are now spending more of their money domestically.
Aside from the boost, the company got from its Chinese sales, the luxury product producer also credits its increase in revenue from its adoption of new stylish designs. The firm recently tapped the talents of designer Virgil Abloh, which reignited interest in the brand.
Meanwhile, the CEO of LVMH, Benard Arnault, has now significantly increased his fortune with the spike in the company's stock prices and sales. The French billionaire has reportedly increased his net worth by more than US$19 billion this year, moving him up to the same category as Warren Buffet and Bill Gates. Arnault still retains the title of being the richest man in France with a net worth of around US$87.4 billion.