Hermés, LVMH & Richemont lift markets

FashionUnited Top 100 Index closed Tuesday at 1,200.84

thanks to a rise of 15.94 points and mainly lifted by the luxury sector. LVMH, Hermés and Burberry were all big news as they lifted European and American stocks.

Takeover speculation lifted the luxury goods sectors after France’s LVMH agreed to buy Bulgari, the Italian jewellery and watchmaker. LVMH, established by billionaire Bernard Arnault, has been built up by acquisition and includes brands such as Louis Vuitton apparel. Analysts said the €3.7bn price tag for Bulgari valued the company at a 60 per cent premium to its February average. The shares soared 59.4 per cent to €12.10 while LVMH climbed 1.3 per cent to €112.95. As The Financial Times reported, rival watchmakers were high up the FTSE Eurofirst 300 leaderboard. Swiss pair Richemont and Swatch each gained 2.2 per cent to SFr54.70 and SFr398.40, respectively. In the same vein, Goldman Sachs said the luxury sector could be ripe for consolidation as it expected it to become a trillion-dollar industry within 15 years. “We believe 600m new customers are set to enter the market by 2025,” the bank said in a note.

Inditex, the Spanish fashion group, rose 2 per cent to €53.30 while Swedish rival H&M gained 1.2 per cent to SKr207.40. Hermès, which resisted a hostile takeover bid by LVMH this year, climbed 1.3 per cent to €153.90. The French maison presented the audited accounts for 2010, with sales of 2,400.8 million euros, up 25.4% (+18.9% at constant exchange rates) and operating income of 668.2 million euros, up 44.3%. Sales in the group’s own stores were up 31% at current exchange rates or 24% at constant exchange rates.

Crossing The Pond, Urban Outfitters shares were down 8.8% after the company missed fourth quarter earnings and revenue estimates and gross margin fell below last year’s levels. Urban said it earned 45 cents on $668.5 million in revenue, versus estimates for 52 cents and $674.9 million in revenue.