|Bid||38.50 x 0|
|Ask||39.10 x 0|
|Day's range||37.48 - 39.11|
|52-week range||25.89 - 43.61|
|Beta (5Y monthly)||0.65|
|PE ratio (TTM)||38.48|
|Earnings date||27 Jul 2020|
|Forward dividend & yield||N/A (N/A)|
|Ex-dividend date||18 May 2020|
|1y target est||37.35|
(Bloomberg Opinion) -- One takeaway from the third-quarter earnings we’ve seen so far is that consumers are still spending — and they’re reaching for big, well-known brands for everything from food to face cream. This has played out most dramatically in high-end retail, where in some cases wealthy shoppers are buying more expensive goods than they were a year ago.There are a few reasons why this may be. As I have noted, some of the spending is coming from savings accumulated during lockdown, and affluent consumers want to get the most bang for their buck. If they’re reaching outside their regular price range or making their first luxury purchase, that often means shelling out for a household name: Louis Vuitton, Christian Dior or Hermes — all of which have seen strong sales recoveries.It also helps that the biggest companies — LVMH Moet Hennessy Louis Vuitton SE, Hermes International, Cie Financiere Richemont SA and Gucci-owner Kering SA — have the resources to make their brands stand out in a crowded market. They can afford to double down on social media campaigns. Meanwhile, consumers want tried and tested styles, whether that’s a Hermes Birkin bag or a Moncler puffer jacket. With fewer occasions to dress up, as well as an increasing awareness of fashion’s environmental costs, shoppers may decide to buy less, but buy better.All of this favors luxury houses steeped in heritage, such as Hermes, the first high-end group to return to sales growth in the third quarter. The handbag maker was also helped by the fact that it’s less dependent on tourist spending, which accounts for about 20% of sales globally, than its competitors, which see 30% to 35% of sales come from tourists, according to Thomas Chauvet, luxury analyst at Citi.But the shift in demand from cutting-edge to classic may be more of a challenge for Gucci, where sales excluding currency movements fell 8.9% in the third quarter. Its flamboyant aesthetic has won a strong following among younger customers. But it’s now toning down its ostentatious styles to adapt to more conservative tastes.Shoppers reaching for the familiar also creates particular challenges for smaller companies. Given the power of the luxury conglomerates and muscular single-brand groups such as Moncler SpA, there may now be more pressure to sell out to them.Salvatore Ferragamo SpA, for example, hasn’t reported its third-quarter sales yet, but the Italian house’s turnaround efforts have been disrupted by the pandemic. Investors will be watching to see whether Ferragamo and other companies seeking to revive their fortunes, such as Burberry Group Plc, are similarly lifted by the rising luxury tide. Ferragamo denied this week that it held talks with investors over a potential stake sale. But the family-controlled group would be wise not to turn its back on any options. The strides that the mega-brands have made this year will make it harder for smaller houses to gain traction with the wealthiest shoppers, even as a strong recovery in demand for luxury is expected in 2021. Of course, there is a possibility that consumer tastes pivot back toward experimentation when the world returns to some semblance of normality. But that future seems far away and far from certain. Even if shoppers do want less familiar, more edgy designs, companies will need to reach them online and through social media channels. Having the best retail locations and hottest designers will also remain crucial. That means continued investment for all groups, big and small.If life continues to get tougher for more niche brands, the next hot trend in luxury could be a shakeup of industry ownership.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Think lockdowns are bad for luxury? Think again.Sales at LVMH Moet Hennessy Louis Vuitton SE’s fashion and leather goods division rose 12%, excluding currency movements, in its third quarter — not far off the levels it was achieving before the pandemic struck. The Bloomberg consensus of analysts’ expectations for the period was for a 0.9% decline.Instead, the bumper performance shows how demand for expensive handbags, cars and watches bounced back once affluent consumers could emerge from their homes and spend some of the money they saved during lockdown. It’s worth remembering as Europe once again tightens restrictions on movement. In China, whose consumers could account for 45% of global luxury sales this year according to Jefferies, shoppers treated themselves as stores reopened. And this so-called “revenge spending” phenomenon has expanded to the U.S. and even Europe, as wealthy individuals divert money they would have splurged on overseas vacations and restaurant dining to high-end boutiques.Until recently, stock markets have rebounded strongly, which typically encourages U.S. consumers to spend. As a result, women may spring for a Christian Dior Bobby bag. Men might shell out on a designer timepiece. Watches of Switzerland Group Plc, the U.K.-based watch and jewelry retailer, recently reported better-than-expected sales.But these results are not just confined to luxury items you can wear. Late on Thursday, Mercedes-Benz owner Daimler AG reported a stunning 5.1 billion euros of industrial free cash flow for the July to September quarter. Its mainly white-collar clientele appear to have been less affected by the pandemic than the hard-hit services sector. Cars have also become pretty handy if you’re worried about using public transport or you’re considering a move from the city to the country.Mercedes-Benz’s big presence in in China — where sales rose 23% year-on-year during the third quarter — has been a big advantage too.Looking ahead, another beneficiary of this bling boom may be Apple Inc., whose top-of-the-range iPhone 12 Pro becomes available for pre-order Friday. Having saved some money during lockdown, consumers might be more willing to splurge on the more expensive new handsets: The iPhone 12 Pro Max costs $1,199, while the iPhone 12 Mini, with fewer bells and whistles, is priced at $649.But there are grounds for caution, as the luxury recovery may not be evenly spread across the industry. If consumers are going to make a special purchase, it’s likely to be from one of the best-known names. LVMH has two: Louis Vuitton and Christian Dior. When it comes to watches, the hottest brands right now are Rolex (there are already waiting lists for its new brightly colored Oyster Perpetual models), Patek Philippe and Audemars Piguet — all privately owned. Watches, handbags and jewelry are also items that work in casual settings. Other high-fashion products, such a formal dresses and stilettos, may be more affected by the lack of events to dress up for. An exception is Moncler SpA’s puffer jackets, which could be in demand as winter approaches, particularly if socializing has to move outdoors.Meanwhile, as concern over the pandemic’s economic toll mounts, the thrill of spending may wane. Add in the damage from a second virus wave in Europe and uncertainty around the U.S. election, and even wealthy consumers may choose to stash, rather than splash, their cash.For now, however, bling is back. Luxury goods groups should make the most of it while they can. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- With the Covid-19 pandemic closing top-end stores and decimating international travel, 2020 is set to be the worst year for the global luxury market in modern history. Yet a new book called “Future Luxe: What’s Ahead for the Business of Luxury” by Erwan Rambourg is optimistic.Among the book’s insights into the next decade are that health will become the ultimate luxury, and that sellers of handbags, shoes and watches will face competition from a new breed of upmarket goods, including cannabis.Rambourg, who has spent 25 years in the industry and is currently HSBC’s global head of consumer and retail research, also predicts a shakeout in the ownership of luxury goods groups. By 2030, he expects LVMH Moet Hennessy Louis Vuitton SE to hold 90 to 100 brands, up from 76 today — or 77 if it follows through with its offer to buy U.S. diamond jeweler Tiffany & Co. By contrast, many smaller competitors will merge, go out of business, be bought or, in some cases, such as puffer-jacket maker Moncler SpA, acquire others. Amid slower growth for so-called accessible luxury handbags, he expects ownership of the Michael Kors, Coach and Tory Burch brands to change in the next 10 years.I caught up with him to discuss the future of luxury. The following is a lightly edited transcript of our conversation.Andrea Felsted: This year will be the worst for the luxury industry in modern history. Yet your book paints an upbeat picture.Erwan Rambourg: There is already evidence of a very strong rebound, in mainland China, but more recently in the U.S. Part of it is artificial and short-term because it is pent-up demand, or revenge purchasing. But part of it is more fundamental. You are not spending a lot on what you used to spend on, such as vacations and going out to restaurants. There is this psychological, almost survival spending. I have gone through this. It has been tough. It has been at times depressing. It has been a bit nerve-wracking. Let’s reward ourselves.AF: One of the things that struck me the most in the book is the chapter on health. After the Covid-19 crisis, could health become the ultimate luxury?ER: We have had a lot of people seeing health as the new wealth. For the time being, the overlap with luxury is more in streetwear and sneakers. Could an LVMH or a Kering SA invest in premium health-oriented companies? You could look at Lululemon Athletica Inc. buying Mirror, a company that helps you stay fit at home. The example of Equinox Group is a good one. Equinox is now at the border of health and hospitality and is also well positioned to benefit from premiumization, and the aspiration of wealthy individuals to be healthy in bodies and minds — part of the health-is-the-new-wealth movement. For the next 10 years, travel is not dead, hospitality is not going to be dead. Health is going to be a great compounding growth sector if there is a way to combine them. In the book I also talk about LVMH’s mission to redefine what luxury should be in the next 10 years. There are not a lot of taboos.AF: Could that include cannabis? You predict that it will become one of the fastest-growing categories.ER: It’s very unlikely that the luxury brands will invest, mostly for issues of regulation. But in some streets in Los Angeles, cannabis companies are competing with luxury companies for locations, for staff and for share of wallet. And you have high-end developments, such as food and wine and cannabis combinations. There is cannabis oil, which is being aged a bit like whiskey and cognac. All of these theoretically can take away some money which would have been spent on luxury brands.AF: You predict that very few companies will remain independent, with the possible exceptions of Hermes International, Chanel and Rolex. How could this play out?ER: Once we get out of this crisis meaningfully, I think we will see a new era of frenzy in M&A. There are very few forced sellers. It’s more about the realization from many families that scale matters. If you are on your own, it is way more difficult to emerge from a crowd. I think families will be merging or selling their assets, not because they have to, but because they understand it is probably the better solution for their name to still be around in 30 years’ time.AF: So the million-dollar question: Will LVMH end up buying Tiffany?ER: Whatever happens, developing jewelry makes sense for LVMH. They have explained they are not going ahead with the deal because of a six-week delay. Yet LVMH is incentivized to take a 30-year view. Either they are looking to get a better price, or there are bigger things that we are not aware of, possibly a tie-up with Richemont. People are talking about them switching brides. But there are a whole bunch of intricacies. The story is not over. We will hear about this for months ahead.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.