Concern as Vuitton loses its lustre

The French group’s insatiable appetite for acquisitions has been tolerated by investors while its cash cow Louis Vuitton, which contributes half of group profit, grew revenues at a rate of more than 10 per cent in the past two decades.

But this year Vuitton’s sales growth halved as it failed to anticipate consumers’ move away from logo-branded luxury goods, Chinese demand cooled and it put the brake on expansion. Uncertainty about the brand’s future growth heightened further last week when a source close to LVMH said Vuitton’s star designer Marc Jacobs was leaving .

With Vuitton in intensive care, investors are taking a harsher look at LVMH’s other brands and growing concerned it will take years for them to provide alternative growth.

LVMH, the No.1 luxury goods group with more than 60 brands from Dior to Hennessy cognac, has never built a major brand from scratch and is one of the industry’s worst stock market performers.

LVMH stock has nudged up just 5 per cent since the start of the year, compared to a 20 per cent share rise across the rest of the luxury goods sector. Meanwhile, the analyst consensus for LVMH’s expected earnings per share (EPS) growth for 2013 is 6 per cent, compared to 15 per cent for the sector.