Luxury goods giant LVMH’s interim results released after the Tuesday closing bell were “solid, but not solid enough”, according to equities analysts at JPMorgan Chase & Co (NYSE:JPM).
Analysts noted a low-single-digit miss on profits, while a robust 21% growth in the fashion and leather goods segment was nonetheless below investors’ mid-20s expectations.
JPMorgan itself expected over 25% growth in this field.
LVMH’s performance has raised some concerns among investors, leading them to question whether the positive trend in luxury earnings is now reaching its end and what factors will drive the sector's growth once it returns to a more normal base.
“While we think these are fair questions that will likely drive the stock and the companies yet to report (Hermes and Moncler in particular) lower… we still believe this level of growth is remarkable and the pace of recovery of the Chinese consumer is encouraging,” wrote JPMorgan.
Breaking down the results, LVMH saw impressive gains in several sectors.
Selective retailing exceeded expectations with a 25% growth in the second quarter compared to JP Morgan's projected 15%.
Watches and jewellery and perfumes and cosmetics also outperformed with a 15% and 16% growth respectively, surpassing estimated figures of 11% and 14%.
These successes managed to offset the disappointments of the above-mentioned fashion and leather goods segment and the wines and spirits category, which reported an 8% decline compared to the estimated 2% drop.
JPMorgan gave LVMH share an overweight rating with an €800 price target.
LVMH shares dipped 5% to €810.60 following the interim results. Hermès International fell 2.6%, Italian fashion house Moncler dipped 2% and Switzerland-based luxury goods retailer Richemont fell one percent.