LVMH’s results could soothe concerns over China

France’s LVMH Moet Hennessy Louis Vuitton SE MC reports its first-half results Tuesday after markets close. Here’s what you need to know:

SALES FORECAST: The company is expected to post second-quarter sales of 10.86 billion euros ($12.73 billion), up from EUR9.83 billion a year earlier, according to estimates based on an analyst consensus provided by FactSet.


-SALES PERFORMANCE: Analysts at Jefferies say that "when LVMH moves, it shakes the landscape." The bank expects LVMH’s first half to be strong, but with a sequential deceleration compared with the first quarter. All divisions should grow but wine and spirits will likely be flat, and specialty retail should be down, Jefferies says.

-CHINA SLOWDOWN: Luxury-goods companies have seen a resurgence in revenue as domestic spending picks up in the Asia-Pacific region, but there are market concerns about a potential slowdown in Chinese consumer spending. Analysts at RBC say LVMH’s first-half results should soothe investor concerns over the company’s exposure to the yuan’s weakness and the recent Chinese stock-market correction.

-CURRENCY TAILWIND: Luxury-goods companies should benefit from the recent weakness of the euro against most currencies, especially the dollar, say analysts at Bryan Garnier. The negative currency effects from the first quarter should be "much less significant" in the second, the firm says.

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