Louis Vuitton Moet Hennessy (EPA:MC), the luxury goods conglomerate, missed revenue targets by about 4% in the third quarter as the high-end goods market experienced a slowdown and with shares slipping close to 6%, analysts are expecting further troubles to ensue.
Prior to the results, JPMorgan Chase & Co (NYSE:JPM) claimed that while headwinds facing LVMH are likely to be felt across the whole industry it did not believe a full read across was viable for companies like Burberry Group PLC (LSE:BRBY), which is down 2.5%, and Gucci owner Kering because they are currently undergoing a transformation plan.
At LVMH’s results, however, management noted how normalisation is taking place in the industry and added that last month the pace was slightly faster than expected.
Analysts at JPMorgan revealed: “The driver of the slowdown was the European cluster, very strong up until Q1 23 and now turning into negative territory, offsetting some of the ongoing recovery with the Chinese cluster that indeed held up for LVMH better than feared.”
They analysts said they “expect LVMH, and the broader sector, to come under further pressure today.”
While the analysts at the US bank are confident the Louis Vuitton and Balenciaga owner is a “top quality player” that can “navigate this ongoing volatility relatively better,” they are still approaching the investment case with caution and “see limited scope for absolute re-rating”.
In the UK, Burberry has around a month till it posts interim results on November 16 and although it has been downgraded by analysts at Citigroup Inc (NYSE:C) and UBS Group AG (NYSE:UBS), the fashion outfit is hedging its bets on Daniel Lee, the group’s chief creative officer.
Despite launching a new collection and refurbishing its Bond Street store, analysts at UBS remain concerned about the headwinds facing the industry and claim Burberry’s “price point is too high for the targeted customer”.
Shares in Burberry are down 13% in 2023, having opened on Wednesday at around 2,000p.