Lvmh weak in Paris after Q1 revenues

(Il Sole 24 Ore Radiocor) - Luxury sector under the lens, in the aftermath of the release of the numbers of the French giant, Lvmh. Shares in the sector are moving in mixed order, partly on the back of analysts' comments following the release of the Arnault family's group's first quarter 2026 earnings, an important test also to understand the impact of the war in Iran, which the group said had dampened organic growth by 1%.

In detail, Lvmh shares closed down fractionally by 0.06% after a session of declines, partly due to the lack of visibility on the 2026 accounts (the group's top management did not provide estimates). Kering's shares, on the other hand, closed up 3% on the day of the publication - at the close of the stock exchange - of its first quarter 2026 earnings and, above all, the Capital Market Day organised in Florence. Analysts are confident in the manager's vision from the automotive sector. Hermes, which will release revenue numbers on Wednesday 15 April, closed up 1%. And Swiss Richemont's shares gained 2.3%, driven by the performance of Lvmh's Jewellery and Watches division, which did very well in the first quarter, boasting organic growth of 7% to 2.4 billion. It should be remembered that Richemont is very exposed to the jewellery sector, for example owning Cartier. In Milan, after the eve's slowdown, positive session for Brunello Cucinelli and Moncler.

Returning to Lvmh's numbers, the group posted revenues of EUR 19.12 billion in the first quarter of 2026, down 6% or up 1% organically. The conflict in the Middle East had a negative impact of about 1%, weighing mainly on the Fashion and Leather Goods division, the most important in terms of turnover: it recorded revenues of EUR 9.24 billion, down 9% or 2% on an organic basis. The Wines and Spirits division fared better, recording revenues of EUR 1.2 billion (-2% or +5%). The Perfume and Fragrances division held up organically, with revenues of 2 billion (-6% and 0%), while the Watches and Jewellery division did very well (2.44 billion revenues, -2% and +7%). Finally, the Selective Retailing division posted revenue of 4 billion (-3% and +4%), with Sephora continuing to record 'solid growth in all regions, gaining market share'. The group gave no indications for 2026, but its finance director, Cecile Cabanis, warned that the company will only post stable margins provided revenues register organic growth of 3-4%. "Maybe you could succeed even with something less, but if you get flat or slightly negative revenue growth, that will have an impact on organic margins," she explained.

Bernstein, however, reiterated its 'Outperform' recommendation on Lvmh, although it revised its price target to EUR 600 from EUR 685. The investment house appreciated the fact that the conference call revealed improvements in the flagship brands Louis Vuitton and Dior. In addition, analysts were also impressed by the indication that demand in China appears to be improving and that demand in America is on the upswing. Of course, Bernstein admitted, 'uncertainty and short-term headwinds are likely to overshadow these underlying improvements. Should the war continue through the second quarter of 2026, we would expect a similar or slightly greater negative impact to the first quarter'. In addition, margin pressures from currency fluctuations and lower revenue growth will remain. Thus, Bernstein lowered its ebit margin forecast for the 2026 financial year to 21.7 per cent from 22 per cent in the 2025 financial year. On the other hand, analysts at Jefferies are more cautious, recommending a 'Hold' on Lvmh, with price target cut by €100, from €610 to €510. "General uncertainty about the propensity of consumers to spend on higher-priced products in the US and Europe and the extent to which less affluent Chinese consumers will resume shopping will be crucial factors," the experts considered, believing however that from a long-term perspective current price levels could also represent an attractive entry value for Lvmh stock.