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LVMH Moet Hennessy Louis Vuitton SE MC

Rating as of

Morningstar’s Analysis

Valuation
Currency in EUR
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Deceleration in LVMH Watches and Jewellery Sales but Fashion and Leather Still Strong; Shares Pricey

Jelena Sokolova, CFA Senior Equity Analyst

Analyst Note

| Jelena Sokolova, CFA |

We are increasing our fair value estimate for LVMH to EUR 394 per share to account for time value of money and the continuation of strong performance in third-quarter 2021. Organic growth came in at 11% for the quarter compared with 2019, in line with the first half and slightly decelerating from 14% recorded in the second quarter. The deceleration was mainly led by the watches and jewellery division (1% growth in the third quarter versus 2019 and 5% growth in the first half versus 2019), with some weakness for Bulgari in Asia due to increased coronavirus containment measures, which may be a negative read-across for Richemont’s jewellery divisions, and which have high exposure to the region (although those have been gaining market share so far through the pandemic and may cushion the blow). The most profitable division fashion and leather goods, which comprises Louis Vuitton and Dior, continued to perform strongly with 38% organic growth from 2019 levels, in line with the first half of the year. Management noted a significant portion of growth in past years for the division (midteens on average since 2017 compared with 7% from 2010 to 2016) and Louis Vuitton in particular, was due to positive mix effect, rather than pure volume, which should help preserve the exclusivity perception of the brand. We believe continuing double-digit growth of the main brand is baked into its current valuation, which we view as optimistic.

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Company Profile

Business Description

LVMH is a global producer and distributor of luxury goods. It operates six segments: fashion and leather goods, its largest and oldest; watches and jewelry; wines and spirits; perfumes and cosmetics; selective retailing (including Sephora and airport duty-free retailer DFS); and other (including publishing). Higher-profile brands include Louis Vuitton, Bulgari, Fendi, Givenchy, Tag Heuer, Hennessy, Moet & Chandon, Glenmorangie, Sephora, and Benefit. LVMH operates more than 5,000 stores around the globe and is headquartered in Paris.

Contact
22, Avenue Montaigne
Paris, 75008, France
T +33 144132222
Sector Consumer Cyclical
Industry Luxury Goods
Most Recent Earnings
Fiscal Year End Dec 31, 2021
Stock Type
Employees 148,343

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