Since March 2024, shares of LVMH (LVMHF) traded in a sustained downtrend. Markets are worried about the increasingly bearish conditions for luxury brands. This sentiment ended last week when LVMH invested in Moncler.
Moncler is an Italian outerwear specialist. The investment may lead to a takeover or a bigger stake later. LVMH bought a 10% stake in Double R, which is controlled by Moncler CEO Remo Ruffini. The purchase amounts to a 1.6% stake in Moncler.
Estee Lauder (EL) is another turnaround play. The company recognizes the change in the competitive landscape. Consumers are using technology, such as the Internet, to inform themselves of fashion trends. EL stock could rebound if the company finds ways of growing net sales above 2.0%. For a few years, sales declined as the firm dealt with destocking. Sales disruptions from the pandemic in China and Asia led to an unwanted increase in inventory.
In the next quarter, Estee Lauder needs retail trends to pick up. However, if that is absent, margins will worsen and inventories will weigh on results.
Hermès Internationa (HESAY) is still attractive despite erasing the March – September sell-off. Still, sales of leather goods continue to grow. For the full year, Hermès is forecasting a 15% sales increase. Jewelry will continue to perform well, offset by the weak watches segment.