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LVMH reports flat profits in key areas—is the luxury sector struggling?

A shopper looks at the window display of a Louis Vuitton store, operated by LVMH Moet Hennessy Louis Vuitton SA.<meta itemprop="author" content="Balint Parneczi Images

A Consumer looks on the window display of a Louis Vuitton retailer, operated by means of LVMH Moet Hennessy Louis Vuitton SA.

The Luxury sector is facing identical headwinds because the airline trade, as terrorism in Europe has weakened demand by decreasing tourism and footfall.

“It has an impact, particularly in Europe,” explained Gerst. “If the market is down, we expect perhaps 1 to 2 % natural increase hit for the entire yr. It’s an impact, however It Is manageable.”

Despite these uncertainties, Gerst felt LVMH used to be an excellent investment conserving.

“We in point of fact like the company, It Can Be very smartly managed in our view,” she stated. “It Can Be way more defensive than individuals think: One third of the EBIT (salary earlier than hobby and tax) is coming from spirits and from cosmetics and also their watch industry is outperforming the trade.”

In The Meantime in the U.Ok., the vote for Brexit may just impact The Luxury sector as shoppers are becoming weary of brands which market themselves on heritage and artisanship, In Step With Peter Maxwell, senior researcher at consultancy the long run Laboratory.

“Native luxurious brands that exchange specifically on their British heritage will take in one of the most harm executed to ‘Brand Britain’ by way of the vitriol of the referendum and the global perception that the U.Ok. is now a less open, tolerant and stable nation,” he advised CNBC by the use of e-mail.

“Patriotism has never been less in vogue and championing the native now has the prospective, rightly or wrongly, to be interpreted as jingoism via certain professional-Eu demographics.”

In Line With Maxwell, Europe is traditionally viewed as the home of luxury manufacturing and severing ties with the continent may have a terrible effect on the picture of British brands amongst vacationers.

Disclosure: GAM holds LVMH shares in its portfolio.

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