LVMH shares rise on reassuring Q1 sales, easing China concerns

LVMH Q1 sales: Shares of LVMH, the world's largest luxury goods group, rose by around 2 per cent in early trading on Wednesday. This positive response comes after the company reported first-quarter sales figures that met analyst expectations, easing investor concerns about the industry's outlook, particularly in China.

LVMH's sales for the quarter ending in March rose 3 per cent organically to €20.69 billion ($22 billion), in line with analyst predictions. This news comes as a welcome relief  for the luxury goods sector, which has been facing anxieties about slowing growth in China, the world's second-largest economy.

China concerns softened

LVMH's performance stands in contrast to Gucci-owner Kering (PRTP.PA), who last month issued a surprise warning of a 10 per cent slump in first-quarter sales, driven by sharp declines in Asia. LVMH, on the other hand, reported that while Asia sales (excluding Japan) were down 6 per cent, purchases by Chinese shoppers globally actually grew by 10 per cent. This suggests that LVMH may be navigating the challenges in China more effectively than some competitors.

Investor confidence reassured

Analysts at JP Morgan highlighted the positive performance of LVMH's Fashion & Leather Goods division, which includes Louis Vuitton and Dior. This segment, previously under scrutiny due to concerns about rising prices impacting demand for high-end products, grew by 2 per cent, meeting both analyst and market expectations. This performance is seen as a sign of continued strong consumer interest in luxury goods, despite economic headwinds.

The positive news from LVMH also appears to be benefiting rival Hermes (HRMS.PA), whose shares rose by 1 per cent following the LVMH results announcement. This suggests that investors are feeling more confident about the overall luxury goods sector after LVMH's reassuring performance.

(With Reuters inputs.)