Luxury Shares Jump After LVMH Powers Through Hong Kong Protests -- 2nd Update

By Matthew Dalton 

PARIS -- Strong third-quarter results at LVMH Moët Hennessy Louis Vuitton SE buoyed shares across the luxury sector Thursday, easing fears that months of protests in Hong Kong and U.S.-China trade tensions would make a dent in global sales of high-end brands.

Paris-based LVMH, the world's biggest luxury company, said revenue for the quarter was EUR13.3 billion ($14.6 billion), an 11% increase after adjusting for the impact of currency fluctuations and acquisitions. LVMH's shares were up more than 4% in afternoon trading, while the news boosted shares of rivals Kering SA by 3%, Burberry by nearly 2% and Cie. Financière Richemont SA and Prada SpA by 1%.

Investors had worried that the protests against China's encroachment on the autonomy of Hong Kong, a magnet for well-heeled shoppers from across Asia, would hurt revenue. Many of the city's high-end boutiques have been forced to close during repeated waves of mass demonstrations since March.

But at least for LVMH, the company is so large and has so many brands - -- including Louis Vuitton, Dior, Fendi and Dom Pérignon -- that disruption in one shopping destination had little impact on the overall conglomerate. Louis Vuitton, the luxury industry's biggest brand, with annual sales estimated at more than EUR12 billion, "enjoyed a remarkable performance in all its businesses and in all regions," LVMH said.

The trade dispute between the Trump administration and China also seemed to have little impact. Chinese shoppers are the luxury industry's most important clients, accounting for roughly a third of global sales.

"This is a testament to the strength of the LV and Dior brands, as well as a reality check on the current global luxury demand momentum," wrote Bernstein analyst Luca Solca.

Hong Kong is particularly important for the Swiss watch industry. In most years, it is the industry's biggest market; it accounted for 14% of total Swiss watch exports in 2018. This year, the protests have had an impact, cutting exports by 6% through August.

But the industry appears to be making up the slack in other markets, particularly mainland China. Swiss watch exports to China are up 14% this year. LVMH -- whose main watch brands are TAG Heuer, Hublot and Bulgari -- said watch and jewelry sales rose 5% in the quarter compared with a year earlier.

Write to Matthew Dalton at [e-mail]

(END) Dow Jones Newswires

October 10, 2019 08:59 ET (12:59 GMT)

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