LVMH Moet Hennessy Louis Vuitton SA - Portfolio momentum offsets F&LG softening
* LVMH delivered solid overall Q3 organic sales growth of 7%
LVMH reported 9M sales of €25.3bn (+18% y/y) as group organic sales growth came in at 7% in Q3
which was a small beat to Bloomberg consensus (5.4%). On a two-year stacked basis organic sales
growth momentum remained stable in Q3 compared to H1.
* Major cognac volume growth in Q3 but F&LG slowed more than expected
Enhanced company reporting now gives exact quarterly performance and confirmed three beats and one
miss by division. The overall beat at group level was led a very strong performance in Wines & Spirits (Q3
16% organic vs cons 5%), driven by the significant rebound in cognac shipments to China (UBSe Q3
total vol growth c22-26%), while Champagne volume growth also accelerated in Q3 (UBSe Q3 total vol
growth c6-10%). However the all-important Fashion & Leather Goods division was a notable miss as
growth slowed to 3% organic in Q3 (cons 6%) – detail is very limited at this stage. From a margin mix
perspective, the acceleration in Wines & Spirits should broadly offset the lower than expected growth in
Fashion & Leather Goods. Across the other divisions, good momentum was sustained in both Perfumes &
Cosmetics (Q3 7%, ahead of cons 4.5%) and Watches & Jewelry (Q3 11%, ahead of cons 7%) despite
toughening comps at both, while Selective Retailing was in line (5%).
* Key focus areas for the call tomorrow (3pm CET)
Key focus areas on the call tomorrow include (1) specific regional developments in F&LG, (2) feedback on
Golden Week sales, (3) price/mix development in cognac and (4) the drivers (and sustainability of) the
rebound in cognac shipments to China.
* Valuation: Our €186 price target is DCF-based
Following the strong share performance into results we think the F&LG softening may lead to a mixed
reaction at open tomorrow despite the overall organic growth beat.