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What should be the top of LVMH’s to-do list in a slowing luxury sector? Tackling so-called “greedflation,” explaining its recent rash of management changes, and fixing Dior, where the women’s business is “under pressure.”
So says HSBC in a new report on LVMH Moët Hennessy Louis Vuitton, which is due to report fourth-quarter sales in the coming weeks.
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The bank maintains a “buy” rating on the stock and is forecasting a “slight improvement” at group level — a 2 percent decline, versus 3 percent in the third quarter — and at its linchpin fashion and leather goods division: a 4 percent erosion versus 5 percent for the previous quarter.
“We remain convinced, for the sector as well as for LVMH, that Chinese consumption has not deteriorated further since Q3 2024, while American consumption of luxury has picked up convincingly since the early November 2024 election,” said the report, which lists as authors the analysts Erwan Rambourg, Anne-Laure Bismuth and Aurelie Husson-Dumoutier.
It also noted that LVMH is the luxury group that is most exposed to the U.S. consumer — therefore the biggest winner from any improvements — and the biggest beneficiary from recent strength in the U.S. dollar.
The report also addressed head-on a slowdown at Dior, which it ranks as the group’s biggest contributor of profits at the level of earnings before interest and taxes after its flagship Louis Vuitton brand.
HSBC estimated revenues at Dior almost quadrupled from 2.7 billion euros in 2018 to exceed 9 billion euros in 2023 — comparative to the explosive growth Gucci experienced under designer Alessandro Michele, growth that quickly fizzled and has yet to improve under his successor, Sabato De Sarno.
“’Does this make Dior the next Gucci?’ is a question we are often asked,” the report said. “Our view is that it is absolutely not the case because management focus and brand investments have been unwavering and the brand has not had a major creative shift like at Gucci. Moreover, some would argue that Dior is less fashion-driven.”
That said, HSBC argued that designs from Dior have become “a bit stale and repetitive,” with men’s goods by designer Kim Jones “doing well still” and women’s goods by Maria Grazia Chiuri “under more pressure.”
“Based on our seven-year rule, it could be time for the brand to shift designers for the latter,” the report said, flagging the possibility that Loewe’s fashion star Jonathan Anderson “could take over from Ms. Chiuri eventually.”