LVMH Moet Hennessy Louis Vuitton, the French luxury group, is about to release its first half results. Here's a breakdown of what you should know:
Operating Profit Expectations
Analysts predict that LVMH's profit from recurring operations for the period of January-June will reach €11.75 billion ($13.07 billion). This is compared to last year's operating profit of €10.24 billion.
The group is expected to achieve sales of €21.14 billion in the second quarter, surpassing last year's €18.73 billion for the same period. Taking into account the first-quarter revenue of €21.04 billion, the first-half sales are projected to reach €42.18 billion, which represents a 15% increase compared to the previous year.
Key Areas of Focus
Fashion & Leather Goods
Investors will closely monitor the performance of LVMH's core fashion and leather-goods business, which boasts the highest margins within the group. In the first half of last year, the Fashion & Leather Goods division contributed to a 24% increase in sales. Analysts predict a 21% growth in division revenues for the second quarter, as compared to the previous year.
Following the relaxation of pandemic restrictions, LVMH experienced significant growth in Asia-Pacific during the first quarter, with a 14% rise in sales compared to the previous year. With this in mind, market attention will focus on the momentum with the Chinese consumer during the second quarter. UBS analyst Zuzanna Pusz highlights market concerns about a slower recovery in mainland China.
Recent reports of a fall in U.S. revenues from luxury stocks, led by Cartier owner Richemont, dampened investor optimism regarding a rebound in sales for the luxury sector in the U.S. and Asia, two major markets for the industry. LVMH will concentrate on the performance of cognac amidst weakening U.S. demand and high inventories in the market, according to Deutsche Bank analysts.