Tuesday 23 January 2018

Luxury goods stocks recover as fears over Japanese sales collapse recede

Andrew Roberts

LVMH Moet Hennessy Louis Vuitton and Burberry led European luxury-goods stocks higher as their quarterly sales beat analysts' estimates and eased concern that last month's earthquake in Japan will hurt growth.

LVMH, the world's largest maker of luxury goods, climbed €5.45, or 5pc, to €115.20 in Paris trading, the biggest jump since May 10 last year.

Burberry, the UK's largest luxury retailer, rose 69p, or 6pc, to 1,215p in London, the highest closing price since the company's July 2002 initial public offering.

The sales reports point to a continued appetite for leather handbags, champagne and trench coats and suggest Japan's crisis won't stall the industry's global rebound.

Burberry raised its earnings forecast and CEO Angela Ahrendts said she was "confident" the London-based company would outperform peers. LVMH cited an "excellent start to the year".

"There ought to be some initial fears allayed over Japan," said John Guy, an analyst at RBS in London.

Demand revival

Demand for luxury goods has revived since the global recession of 2009 as wealthy consumers regained confidence and retailers replenished inventories.

Analysts cut estimates for some companies last month after the March 11 earthquake and tsunami in Japan left almost 28,000 people dead or missing and triggered the world's worst nuclear crisis in a quarter century.

Japan is the world's second-largest market for luxury goods after the US, accounting for 11pc of the total.

Revenue at LVMH rose 17pc to €5.25bn last quarter, the company said in a statement yesterday. That compared with the €4.98bn average estimate of six Bloomberg analysts.

Burberry said revenue in the fiscal fourth quarter ended March 31 rose 32pc to £390m (€444m). (Bloomberg)

Irish Independent

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