LVMH and Adidas spur gains on European trading floors 📈

Wednesday’s session on stock markets brings a rebound from the dynamic declines seen over the past two days. The leaders of the increases, largely driving today’s rises, are two companies from the apparel/luxury goods sector.

Investors’ attention today turns to LVMH (MC.FR), which is gaining 4.2%, and Adidas (ADS.DE), which is up 6.5%.

LVMH – quarterly results reassure investors

Let’s start today’s review with a look at the global giant in the fashion sector, the Louis Vuitton Moët Hennessy company. The company presented a report that fell short of investors’ expectations in many respects, but managed to reassure the market about the stability of the current economic environment, thus paving the way for better revenue growth in the following quarters.

FIRST QUARTER RESULTS

• Organic revenue +3%, estimate +3.28%
• Fashion and leather goods organic sales +2%, forecast +3.22%
• Wine and spirits organic sales -12%, forecast -8.66%
• Perfumes and cosmetics organic sales +7%, forecast +6.72%
• Watches and jewelry organic sales -2%, estimate -0.75%
• Selective retail organic sales +11%, forecast +10.5%
• Organic revenue in the US +2%, forecast +3.01%
• Organic revenue in Asia excluding Japan -6%, forecast +4.14%
• Organic revenue in Japan +32%, estimate +14.7%
• Organic revenue in Europe +2%, estimate +3.49%
• Revenue €20.69 billion, -1.6% y/y, estimate €21.18 billion
• Apparel and leather goods revenue €10.49 billion, -2.2% y/y, estimate €10.71 billion
• Revenue from wines and spirits €1.42 billion, -16% y/y, estimate €1.53 billion
• Revenues from perfumes and cosmetics €2.18 billion, +3.2% y/y, estimate €2.19 billion
• Revenue from watches and jewelry €2.47 billion, -4.8% y/y, estimated €2.49 billion
• Revenues from selective retailing €4.18 billion, +5.4% y/y, estimated €4.26 billion

COMMENTS

• The company’s management confirmed that trends in the haberdashery and fashion sector were similar to those seen in recent years, suggesting stability in this seasonal relationship.
• According to the company’s CFO, demand from China for these products increased by 10% in the first quarter.

COMPANY’S STOCK CHART

MC.FR shares are currently testing an important resistance point set by the 50-day exponential moving average (blue curve on the chart). Source: xStation

Adidas – shares at their highest in two years

ADS.DE shares are gaining nearly 6.5% today, reaching their highest level in the past two years, after the sports company raised its full-year forecast for revenue growth and operating profit. The company also reported better-than-expected preliminary results for the first quarter.. 

FORECAST FOR THE YEAR

• The company expects operating profit of around 700 million euros, up from around 500 million euros previously, analysts estimated 813.5 million euros.
• The company expects currency-neutral revenues to grow at a mid to high single-digit rate.

PRELIMINARY FIRST-QUARTER RESULTS

• Preliminary currency-neutral revenue growth 8%, estimates 3.47%
• Preliminary gross margin 51.2%, estimates 47.1%
• Preliminary operating profit €336 million, estimates €115.1 million

COMMENTS

• The latest drop of Yeezy shoes generated revenue of about €150 million and operating profit of about €50 million in the first quarter
• In its forecasts, the company assumes that the remaining Yeezy inventory will be sold during the remainder of the year at the average production price
• This would result in additional sales of about 200 million euros and no further profit contribution for the rest of the year.

COMPANY’S STOCK CHART

The stock continues its dynamic upward trend and is trading at its highest levels since 2022. 

Source: xStation