LVMH’s fashion and leather goods unit saw revenue growth of just 2% in the first quarter of this year, which is down from 18% growth a year earlier.
👉 Background: LVMH is the luxury fashion conglomerate that has more than 75 luxury brands under its ownership, including OGs like Louis Vuitton, Moet Hennessy but also Christian Dior, Fendi and Bulgari.
👉 What happened: LVMH’s fashion and leather goods unit saw revenue growth of just 2% in the first quarter of this year, which is down from 18% growth a year earlier. At the same time, LVMH's biggest rival Kering, the owner of Gucci, warned that Gucci's sales are likely to fall 20%.
👉 What else: When LVMH announced 2% sales growth, its share price actually increased because the forecasted sales decline had already been ‘priced in’ to the LVMH share price before the announcement.
💡When outcomes are "priced in" to a share price, it means that investors have anticipated certain results and have already factored them into the value of a company before the official announcement.
💡In the case of LVMH, investors expected poor results and the share price had dropped before the announcement. In fact, LVMH’s share price is down more than 8% in the past 12 months.
💡 But when the results weren't as bad as expected, LVMH's share price went up because a negative growth was priced in.
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