LVMH – company analysis post Q116 results

We left our price target on LVMH unchanged at €167/share post Q116 sales and revenue release. This represents a 10 per cent upside to the current price. Sales came in line with our expectations but one per cent below market expectations. We believe the obstacles encountered in the first quarter are one off events. Going forward the Group should continue moving the right direction.  Organic growth in fashion and leather goods was reported below expectations for Q116 mainly due to the following two reasons: DKNY - Donna Karan, the founder and chief designer of Donna Karan International retired. LVMH decided to suspend the Donna Karen collection. LVMH will reorganize its teams and structure to “substantially increase its focus on the DKNY brand,” the company’s more accessible line, which is currently responsible for 80 percent of Donna Karan International revenue. It will also maintain its license business. Marc Jacobs – Transition of collections The company also saw a small deceleration in demand for Louis Vuitton products mainly due to the terror attacks in Paris which resulted in lower tourists. We expect this to be a one off and consumption and tourism to resume to normal...