PARIS — LVMH shares gained after the head of the Louis Vuitton brand gave a rosy view of its China business, easing concerns about the effects of a trade war with the US.
The label is experiencing “unheard-of growth rates” in China, Vuitton Chief Executive Michael Burke said in a meeting with analysts in Paris, according to a note from Citi analyst Thomas Chauvet. Consumers in the key luxury market have been buying more handbags and watches at home instead of abroad in recent months, a trend that LVMH Chief Financial Officer Jean-Jacques Guiony has previously flagged.
The confident message on China, also reflected in notes from analysts at Sanford C. Bernstein, Jefferies and RBC, bolstered shares of LVMH and other luxury companies on Wednesday, according to Keith Temperton, a sales trader at Tavira Securities. The Paris-based company’s stock traded as much as 3.1 percent higher, with rivals Hermes International and Kering SA each gaining 1.7 percent. Watchmaker Richemont gained as much as 3.8 percent.
After slumping late in 2018, LVMH has risen 36 percent this year, making it the second-best performer on France’s CAC 40 index for the period. A representative for the owner of Dom Perignon Champagne and Tag Heuer watches declined to comment on the analyst meeting.
As the US-China trade war rages, Beijing has been reducing import tariffs on many European products in a bid to boost domestic consumption and discourage “daigou” — the widespread practice of bringing in undeclared souvenirs from foreign trips to resell them on the mainland. Prices there for products like Louis Vuitton’s $1,320 Neverfull totes were historically much higher than abroad, but the gap is closing.
As the shift in spending takes hold, Tiffany & Co. said earlier this week that US sales to Chinese tourists fell by more than 25 percent last quarter.
By Robert Williams and Albertina Torsoli; editors: Eric Pfanner and John Lauerman.