Investors have been selling fashion and luxury in recent years.
One of the biggest representatives of this segment, $MC.PA, today came out with somewhat surprising results. How did it do?
LVMH shares plunged to their lowest level since 2020. Since the beginning of the year, the company has lost about 40% and its market capitalization has fallen to approximately 190 billion euros.
The market continues to punish the slow recovery in demand for that luxury.
Organic revenue growth accelerated from 1% in the first quarter to just 3% in the second, even though the fashion and leather goods division returned to growth for the first time in 2 years. Working against it are weaker Europe and Japan, a double-digit decline in the Middle East due to the war with Iran, and unfavorable exchange rates. The company itself says it needs organic growth of around 3 to 4% to maintain margins.
Valuation has meanwhile fallen to about 17.5 times earnings and the dividend yield reaches 3.35%. After this year's decline, Bernard Arnault (CEO) bought additional shares for approximately 407 million euros and wants to push the family's stake above 50%.
The average analyst target price is 526 euros, indicating room for potential upside of 37%.