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LVMH shares jump as fears of sharp slowdown in luxury sector ease

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LVMH shares jump as fears of sharp slowdown in luxury sector ease

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LVMH shares climbed more than 10 per cent on Friday after the world’s biggest luxury group reported better than expected quarterly sales, raising hopes the sector can avoid a sharp slowdown this year.

The resilient demand from LVMH’s consumers in the final quarter of 2023 was enough to drag up the shares of rival luxury groups, with Gucci owner Kering up 3 per cent and Swiss watchmaker Richemont gaining 4 per cent.

Controlled by French billionaire Bernard Arnault, LVMH is regarded as a bellwether for the industry because of its size and the range of the 75 brands it owns, which include Louis Vuitton and Dior. The Paris-based group also owns jeweller Tiffany’s and the chain of Cheval Blanc hotels.

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The group’s fourth-quarter sales climbed 10 per cent, topping analysts estimates. Sales at its fashion and leather goods business — its biggest division by revenues and profit — rose 9 per cent to €11.3bn, matching forecasts.

The performance of its fashion and leather goods division in particular is seen as a proxy for the luxury goods market globally. While the pace of sales growth has slowed from the records set during the pandemic, analysts were encouraged by LVMH’s upbeat tone.

“The confident tone [plus] resilient year-end demand and margins . . . supports our view that 2024 could be a smooth rather than difficult year of normalisation for LVMH,” said Thomas Chauvet, an analyst at Citigroup.

Friday’s bounce in the shares of luxury groups comes after a bruising six months for the sector as investors braced for a weakening in demand. Consultancy Bain has forecast that the industry’s growth will slow from an estimated 8 to 10 per cent last year to about 4 per cent in 2024.

LVMH chief financial officer Jean-Jacques Guiony told the Financial Times on Thursday that sales around Christmas rose to “a level of activity which was satisfactory at around 10 per cent growth, which the market might find disappointing because they had foolishly gotten used to 20 or 25 per growth every year”.

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“That is not something we can do forever and it is not desirable. We are in a moment when these numbers have normalised to a relatively high and relatively favourable level, so we are quite happy,” he added.

Shares in LVMH were up 11 per cent in late-morning trading on Friday, driving the group’s market capitalisation to €382bn. Despite the gain, the stock remains 16 per cent below its record high in April 2023.

The jump in LVMH was enough to drive France’s benchmark index, the Cac 40, up 1.6 per cent.

“The 2023 performance illustrates the exceptional attractiveness of our brands and their capacity to create desire during a year that was tense on the economic and political spheres,” said Arnault. “While remaining vigilant in the current context, we look to the year 2024 with confidence.”

For the whole of 2023, LVMH grew its sales by 9 per cent to €86.2bn, in line with analysts’ estimates, but below the 23 per cent increase it achieved in 2022. Profits across the group increased 8 per cent to €15.2bn.  

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Signs of resilience from LVMH came as Arnault, the company’s president and chief executive, consolidated the hold of the controlling family’s next generation with nominations for two of his sons to the board.

Both Alexandre, 31, and Frédéric, 29, had been put forward as candidates for the board, the company said. The nominations will be voted on at the company’s annual meeting in April. If successful, four out of five Arnault children will be on the board, with only 25-year-old Jean without a seat.

“When we enter LVMH, we are joining a family,” Arnault, 74, said. “But I have no intention of leaving in either the short or medium term.” 

The company will also propose increasing its annual dividend to €13 per share at the annual meeting, up from €12 the year before.

A standout in 2023 was the group’s beauty retailer Sephora, which delivered record sales and profits as shoppers’ appetite for skincare and cosmetics defied the dent made in their spending power by inflation.  

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The French luxury group’s selective retail division, which houses Sephora as well as travel retail, increased sales by a quarter to €17.8bn in 2023 and raised its operating profit by 76 per cent, carried by strong performance in North America, Europe and the Middle East.

The business benefited from global beauty demand as well as the return to work after the pandemic, said Guiony, with shoppers flocking back to city-centre locations that had emptied during global lockdowns. 

Fashion and leather goods revenues rose 9 per cent to €42.2bn for the year, in line with consensus expectations compiled by Eikon. However, the pace of growth dropped off compared with the runaway 25 per cent increase in sales in 2022. 

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Trump claims US stockpiles mean wars can be fought ‘forever’; Kristi Noem testifies before Congress – US politics live

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Trump claims US stockpiles mean wars can be fought ‘forever’; Kristi Noem testifies before Congress – US politics live

Trump says US stockpiles mean “wars can be fought ‘forever’”

In a late night post on Truth Social, Donald Trump said that the US munitions stockpiles “at the medium and upper medium grade, never been higher or better”.

He added that the US has a “virtually unlimited supply of these weapons”, meaning that “wars can be fought ‘forever’”.

This comes after Trump said that the US-Israel war on Iran could go beyond the four-five weeks that the administration initially predicted. The president also did not rule out the possibility of US boots on the ground in Iran during an interview with the New York Post on Monday.

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“I rebuilt the military in my first term, and continue to do so. The United States is stocked, and ready to WIN, BIG!!!,” he wrote.

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Key events

During his opening remarks, Senate judicicary committee chairman, Chuck Grassley, blamed Democrats for the ongoing shutdown Department of Homeland Security (DHS) but highlighted four agencies: the Secret Service, Federal Emergency Management Agency (FEMA), the Transportation Security Administration (TSA), and the Coast Guard.

Democrats are demanding tighter guardrails for federal immigration enforcement, but a sweeping tax bill signed into law last year conferred $75bn for Immigration and Customs Enforcement (ICE), which means the agency is still functional amid the wider department shuttering.

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Supreme Court blocks redrawing of New York congressional map, dealing a win for GOP

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Supreme Court blocks redrawing of New York congressional map, dealing a win for GOP

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The Supreme Court on Monday intervened in New York’s redistricting process, blocking a lower court decision that would likely have flipped a Republican congressional district into a Democratic district.    
  
At issue is the midterm redrawing of New York’s 11th congressional district, including Staten Island and a small part of Brooklyn. The district is currently held by a Republican, but on Jan. 21, a state Supreme Court judge ruled that the current district dilutes the power of Black and Latino voters in violation of the state constitution.  
  
GOP Rep. Nicole Malliotakis, who represents the district, and the Republican co-chair of the state Board of Elections promptly appealed to the U.S. Supreme Court, asking the justices to block the redrawing as an unconstitutional “racial gerrymander.” New York’s congressional election cycle was set to officially begin Feb. 24, the opening day for candidates to seek placement on the ballot.  
  
As in this year’s prior mid-decade redistricting fights — in Texas and California — the Trump administration backed the Republicans.   
 
Voters and the State of New York contended it’s too soon for the Supreme Court to wade into this dispute. New York’s highest state court has not issued a final judgment, so the voters asserted that if the Supreme Court grants relief now “future stay applicants will see little purpose in waiting for state court rulings before coming to this Court” and “be rewarded for such gamesmanship.” The state argues this is an issue for “New York courts, not federal courts” to resolve, and there is sufficient time for the dispute to be resolved on the merits. 
  
The court majority explained the decision to intervene in 101 words, which the three dissenting liberal justices  summarized as “Rules for thee, but not for me.” 
 
The unsigned majority order does not explain the Court’s rationale. It says only how long the stay will last, until the case moves through the New York State appeals courts. If, however, the losing party petitions and the court agrees to hear the challenge, the stay extends until the final opinion is announced. 
 
Dissenting from the decision were Justices Sonia Sotomayor, Elena Kagan, and Ketanji Brown Jackson. Writing for the three, Sotomayor  said that  if nonfinal decisions of a state trial court can be brought to highest court, “then every decision from any court is now fair game.” More immediately, she noted, “By granting these applications, the Court thrusts itself into the middle of every election-law dispute around the country, even as many States redraw their congressional maps ahead of the 2026 election.” 

Monday’s Supreme Court action deviates from the court’s hands-off pattern in these mid-term redistricting fights this year. In two previous cases — from Texas and California — the court refused to intervene, allowing newly drawn maps to stay in effect.  
  
Requests for Supreme Court intervention on redistricting issues has been a recurring theme this term, a trend that is likely to grow.  Earlier last month  the high court allowed California to use a voter-approved, Democratic-friendly map.  California’s redistricting came in response to a GOP-friendly redistricting plan in Texas that the Supreme Court also permitted to move forward. These redistricting efforts are expected to offset one another.     
   
But the high court itself has yet to rule on a challenge to Louisiana’s voting map, which was drawn by the state legislature after the decennial census in order to create a second majority-Black district.  Since the drawing of that second majority-black district, the state has backed away from that map, hoping to return to a plan that provides for only one majority-minority district.    
     
The Supreme Court’s consideration of the Louisiana case has stretched across two terms. The justices failed to resolve the case last term and chose to order a second round of arguments this term adding a new question: Does the state’s intentional creation of a second majority-minority district violate the constitution’s Fourteenth and Fifteenth Amendments’ guarantee of the right to vote and the authority of Congress to enforce that mandate?    
Following the addition of the new question, the state of Louisiana flipped positions to oppose the map it had just drawn and defended in court. Whether the Supreme Court follows suit remains to be seen. But the tone of the October argument suggested that the court’s conservative supermajority is likely to continue undercutting the 1965 Voting Rights Act.   

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Map: Earthquake Shakes Central California

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Map: Earthquake Shakes Central California

Note: Map shows the area with a shake intensity of 3 or greater, which U.S.G.S. defines as “weak,” though the earthquake may be felt outside the areas shown.  All times on the map are Pacific time. The New York Times

A minor earthquake with a preliminary magnitude of 3.5 struck in Central California on Monday, according to the United States Geological Survey.

The temblor happened at 7:17 a.m. Pacific time about 6 miles northwest of Pinnacles, Calif., data from the agency shows.

As seismologists review available data, they may revise the earthquake’s reported magnitude. Additional information collected about the earthquake may also prompt U.S.G.S. scientists to update the shake-severity map.

Source: United States Geological Survey | Notes: Shaking categories are based on the Modified Mercalli Intensity scale. When aftershock data is available, the corresponding maps and charts include earthquakes within 100 miles and seven days of the initial quake. All times above are Pacific time. Shake data is as of Monday, March 2 at 10:20 a.m. Eastern. Aftershocks data is as of Monday, March 2 at 11:18 a.m. Eastern.

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