PARIS, Jan 27 (Reuters) – LVMH shares rose slightly on Friday morning, after initially opening sharply in the red, as investors were divided after the announcement of the luxury giant’s quarterly results, which became the first capitalization stock market in Europe.
At 10:25 am, the action gained 0.52% to 805.8 euros, after having lost up to 2.2% in the first exchanges, while the CAC 40 was almost unchanged at the same time (+0.07%) .
LVMH’s organic revenue growth, at 9% in the fourth quarter, exceeded expectations, but the level of margins disappointed and activity in China at the end of the year was weaker than expected. anticipated.
“The group delivered a stable operating margin compared to 2021 (vs. consensus of +90bps), largely reflecting the maintenance or increase in marketing spend in the second half despite disrupted revenue growth. “, commented analysts at Credit Suisse.
LVMH chief financial officer Jean Jacques Guiony said on Thursday that he had decided to maintain marketing investments in the second half, at a level 30% higher than in 2021, despite weaker growth in turnover, but that he had not expected such a significant drop in activity in China in December.
He added that the strategy of parallel distribution channels for the Perfumes & Cosmetics division was “a costly decision” which impacted profitability but that it was “the right decision” which will guarantee the attractiveness of its brands.
“Such a leap forward in marketing, especially for brands of this size and with this current momentum, in our view raises a question mark for the entire industry in terms of the scale of ongoing investment needed to sustain the momentum. of the brand and to consistently excite and engage increasingly discerning consumers,” the JPMorgan analysts said.
For their part, Jefferies analysts note in a note the confident speech of the management for 2023, “especially if the trend in China observed since the beginning of the year continues (and we believe that this will be the case)”.
“The fourth quarter is less telling than you might think: we expect outperformance versus the sector going forward,” they say. (Mimosa Spencer and Sudip Kar-Gupta, French version Laetitia Volga and Blandine Hénault)