PARIS (Reuters) -LVMH’s shares slumped on Wednesday, knocking back other shares in the fashion sector, as the French luxury giant’s third quarter revenues showed signs of a slowdown in growth.
LVMH’s shares were down by around 6% in early session trading, dragging down the share prices of rivals such as Kering, Hermes, Swatch and Richemont.
LVMH, whose labels include Louis Vuitton, Dior and Tiffany, had reported late on Tuesday a 9% rise in third quarter revenue, marking slower growth as a strong wave of post-pandemic spending eases due to inflation and economic turbulence.
“LVMH in our view remains one of the top quality players in the sector and among the names that should navigate this ongoing volatility relatively better; but with currently negative earnings momentum and uncertain outlook, we see limited scope for absolute re-rating in the short-term,” wrote JP Morgan in a research note.
Investors have recently questioned the appetite for shares in the luxury goods sector, in the face of a Chinese slowdown and interest rate uncertainty.
Some $175 billion has been knocked off the value of 10 of Europe’s leading luxury good stocks since the end of March, as China’s recovery has been rocky and growth is slowing, while high inflation and rising interest rates are forcing U.S. shoppers to tighten their purse strings.
(Reporting by Mimosa Spencer;Editing by Sudip Kar-Gupta)
