CLOSING SHORT LVMH

UPSIDE RISK; +0.26% RETURN

Judging by Prada numbers we feel they will have an ok quarter.

A few houses been pushing kering into LVMH numbers so expectations are for a decent quarter.

EU and Japanese spending to make up for China weakness.

We became greedy on the sell off and now close our short as we feel risk is to the upside into numbers on Monday +0.26%.

 

SHORT: STICKING WITH SHORT INTO NUMBERS LATER

Monday • 13 April 2015 • 08:37

Luxury backdrop warrants sticking with it!

We are wary of participating in a consensus position, but feel that the ongoing deterioration of the luxury backdrop warrants sticking with it.

Consensus is looking for 3% organic.FLG will be the important swing as usual.

Cons is looking for 1%. Tough comps in Japan following the pre buy ahead of the VAT increase in Q1 2014, and 40% of sales in Asia where trading remains difficult, the risk here is to the downside.

KER talking the market down last week, Hong Kong / Macau slowdown to offset benefit generated by the EUR move (the key reason to own the stock), this remains a core short.

 

POWERFUL SQUEEZE

Wednesday • 04 February 2015 • 10:40

Powerful short squeeze as market focus was on better organic sales.

The fashion and leather organic was better than expectation and that is what
the market will focus on ST.

However H1 will be tough comps wise added to the continuing tough environment.

Although that is not the focus today +6% is more than enough of a short squeeze. There may well be some more action around the US open.

For now we stay short and vigilant. Currently -5.5%

 

ORGANIC GROWTH SLOWING DOWN SELL

Friday • 30 January 2015 • 14:49

+11% YTD and +33% off October lows. Market is aware of positive currency impact of the weaker EUR

This performance is in contrast to 8 consecutive quarters of earnings downgrades

It now  trades on a punchy 19x earnings.  Going into a quarter where we are likely to see the worst ever organic growth number in fashion and leather

Since the SNB debacle if you want to be in Luxury you had  little choice and LVMH has benefitted from flows

Consensus for next year implies a re-acceleration of organic growth year

Difficulties for high end consumers in China (anti-Graft and corruption) , Russia,  Japan (Yen weakness) , Arabic nations (Oil price) have already been well documented in warnings from Prada, Chow Tai Fook, Richemont and today with Emperor Watch

Meaning  that re-acceleration of growth highly unlikely, and consensus is way too high.  SELL.