LVMH Leads Luxury Share Rallies Despite Market Slump After Record 2023 Results

Shares of LVMH Moet Hennessy Louis Vuitton, listed on the Euronext Paris stock exchange, experienced a notable surge on Friday. This rally followed the luxury conglomerate's decision to increase its dividend, driven by impressive 2023 results. The positive momentum extended to other companies in the luxury sector, offering a respite from the recent industry slowdown.

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Headquartered in Paris, LVMH, the conglomerate that owns prestigious brands like Christian Dior and Tiffany & Co, witnessed a substantial 10% growth in sales during the fourth quarter, reaching €23.9 billion ($26 billion). This upswing contributed to the company achieving record-breaking full-year revenue of €86.2 billion. LVMH's Paris-listed shares on the Euronext Paris exchange surged by 8% on Friday, rebounding from an 8% decline over the previous 12 months.

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The conglomerate's robust performance translated to an 8% increase in net income, reaching €15.2 billion. Sales growth was evident across all segments, excluding the wine & spirits division, encompassing brands like Hennessy and Moët & Chandon.

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The positive trend extended to other luxury goods companies such as Hermes International, Kering, Christian Dior, and Prada, all witnessing a lift in their share prices. This marked a welcome turn for the sector, which faced challenges due to a decline in consumer spending post the COVID-19 boom.

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Despite a slowdown in sales growth during the latter half of 2023, LVMH's CEO, Bernard Arnault, expressed confidence as the company entered 2024. The CEO highlighted that the expected boost in sales for 2024 could be attributed to lower interest rates and the upcoming U.S. elections. Arnault noted the historical positive impact of elections on LVMH's business.

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The latest results followed Arnault's move to nominate his two sons, Alexandre and Frédéric, aged 31 and 29, respectively, for positions on the luxury conglomerate's board of directors. This decision aims to further solidify the family's control over the company.

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In 2023, Arnault briefly lost his status as the world's richest person to Amazon founder Jeff Bezos due to a dip in LVMH's share price amid a global slowdown in luxury goods demand. Currently holding the third position on Bloomberg's Billionaire Index, Arnault's net worth stands at $164 billion.

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Additionally, the company announced its intention to propose a dividend increase from €7.50 a share to €13 a share. Citi analysts, led by Thomas Chauvet, anticipate continued sales growth for LVMH in 2024, supporting the shares in the short term. They note that this positive trajectory should help offset the recent lag in the company's shares.

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