Shares of Louis Vuitton Moet Hennesy (LVMUY 10.32%) were moving higher today in symphony with a strong earnings report from luxury peer Richemont (CFRUY 17.30%), the owner of Cartier. The results seemed to indicate a long-awaited recovery in the luxury sector, and sector stocks broadly gained on the news.
As of 1:07 p.m. ET, LVMH stock was up 9.8%, compared to Richemont’s 15.4%.
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A rising tide lifts luxury
Richemont reported a 10% increase in third-quarter sales to 6.2 billion euros ($6.4 billion), and it saw double-digit growth in nearly every region, including the Americas, Europe, the Middle East & Africa, and Japan. It did note challenging demand in China, a key market for the luxury sector and one where LVMH has struggled.
Richemont added that sales fell in the Asia-Pacific region but that the decline slowed at 7%. Sales in China were down 18%. Across its product segments, the growth was broad-based, with a 14% increase in jewelry.
The Cartier parent is the first major luxury company to report earnings this quarter, so it’s unsurprising to see other luxury stocks rising on the news. Its report also reflects the key holiday season when luxury sales tend to jump.
What it means for LVMH
Like much of the luxury sector, LVMH has struggled recently, especially in China. Through the first three quarters of 2024, organic revenue has been flat due in part to an 8% decline in wines and spirits.
LVMH isn’t a perfect overlap with Richemont as LVMH is more diversified with alcohol, fashion, and Sephora. Still, the luxury sector does tend to move together, though Richemont focuses on the highest end of the market.
Overall, the news bodes well for LVMH, as a turnaround in the sector seems overdue.
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
