Champagne for the stock market! Gaining 2.36% this Friday, the CAC 40 hit a new high, closing at 7,634 points. The index thus surpassed its previous record of December 15, 2023 when it reached 7,596 points. At the root of this new rebound following a bit of a chill in early January: a return in favor of the luxury sector.
Last night, LVMH published financial results for the year 2023, better than analysts’ forecasts, with sales of 86.2 billion euros (+9%) and net profit of 15.2 billion euros (+8%). Since the third quarter, luxury markets in Europe and the United States have slowed, and growth has been surprising since the expected growth in China has not recovered. The revenue growth achieved by LVMH in Uncle Sam’s country in the fourth quarter far exceeded expectations: +8% compared to less than 2% predicted by analysts surveyed by Bloomberg. In short, against all expectations, the group announced “ A new record year », which pleased investors and at 6 pm the share price increased by 12.8% to 773 euros.
“The expected impact of this potential catalyst was significant, as French luxury, which represents 32% of the total capitalization of the CAC 40, has had a negative impact on the French index for months”Antoine Andreny, analyst at broker XTB, explains in a note.
The rest of the luxury also in the party
Ahead of Bernard Arnault’s group release, spirits group (equivalent to the luxury sector by analysts) Remy Contreau had already excited shareholders by claiming to have sold 319.9 million euros worth of bottles in the fourth quarter, far exceeding expectations. Analysts surveyed by FactSet. That was enough to take the title up to 101 euros, up 15.16% in one session.
And on this day of panic buying, even groups that have yet to publish their results have seen their prices rise. Thus, in luxury, shares of L’Oreal gained 2.90 while shares of Hermès and Kering gained more than 6%. Similarly on the spirits side, Pernod Ricard benefited from its competitor’s good results and increased its price by more than 7%.
2023, a bad vintage for luxury
After a year of scarcity, now is the time for investors to buy luxury. After disappointments during the release of its third quarter results and fears of sluggish consumption in the second half of 2023 and 2024, LVMH woke up with a hangover and saw its share price fall 19% between January 17, 2023 and January 17, 2024. A very poor performance that its Rival Kering also saw a price drop of 30% over the same period, while Hermès and L’Oréal managed to maintain their price increases.
As for spirits, a big return in the stock market can be seen even in the gloomy light of 2023. Thus, Remy Contre lost 45% of its value last year due to fears of a sharp drop in consumption in China, one of its main customers.
It remains to be seen whether consumption and economic activity across the globe will pick up again or give way to a slowdown.
(with AFP)
