This article first appeared on GuruFocus.
LVMH (LVMHF), the global luxury powerhouse, fell over 1.8% to $499.2232 Thursday, crashing to its lowest level since 2020. The market's message is blunt. One quarter of 1% growth from the fashion engine does not make a comeback.
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Fashion and Leather Goods delivered 18.15 billion of first-half revenue, nearly 47% of LVMH's 38.64 billion total. Organic sales dropped 1% during the half, then crawled 1% higher in the second quarter. Groupwide organic growth reached 3%, but the company's biggest division is still moving far too slowly.
LVMH is not financially fragile. It held its operating margin at 22.5%, generated 4.1 billion in operating free cash flow and slashed net financial debt 19% to 8.25 billion. The valuation chart exposes the opportunityand the doubtwith the stock trading 26.64% below its $680.55 GF Value. The discount looks tempting, but fashion and leather must deliver real acceleration before investors will pay up.