PARIS — Shares in LVMH Moët Hennessy Louis Vuitton shot up on Friday after the group reported better-than-expected third-quarter sales, pulling up other European luxury sector stocks in its wake.
LVMH was up 7 percent to 431.50 euros in mid-afternoon trading, after the luxury conglomerate reported organic revenues fell by 7 percent in the three months ended Sept. 30, beating market expectations for a 12 percent drop.
The group said sales trends improved sharply in the third quarter, driven by its key fashion and leather goods division, amid signs of a global upturn in activity, particularly in the U.S. and Asia.
The figures raised hopes of a recovery for the luxury sector, battered by the coronavirus pandemic, which shut down stores and factories and continues to ground international travel.
Shares in Kering were up 4.3 percent, Hermès International rose 2.7 percent and Compagnie Financière Richemont gained 1.9 percent. Meanwhile, Burberry was up 3.6 percent, Tod’s SpA rose 0.9 percent and Salvatore Ferragamo SpA gained 2.3 percent.
“The 2020 third-quarter update confirms our impression of a strong summer for luxury goods, and the likelihood that best in class luxury brands would already be in growth mode year on year,” said Luca Solca, analyst at Bernstein. “We expect more players to follow this path — most notably Hermès.”
Not everyone believes that LVMH’s performance can be extrapolated to other brands.
Piral Dadhania and Richard Chamberlain, analysts at RBC Europe, said LVMH’s sales beat, fueled by a 12 percent increase in organic revenues in fashion and leather goods division, “will be amongst the strongest revenue recoveries across the European luxury sector, and should confirm its relative outperformance credentials in our view.”