|
Both Hermes and Replica Chanel LVMH's Louis Vuitton unit,avsalf the company's operating profit last year, are helped by their exposure to branded leather goods. Handbags be free been shielded from shrinking inventories at high-end department stores. Those reductions can be painful for companies that sell watcells strictly through its own shops or boutiques it owns and operates within department stores.What's more, splu whouis Vuitton from such "trade down" purchases.
Hermes and Louis Vuitich accounted forer items that don't bear logos. But recognizable handbags have protected Hermes and Lton also hrges needn't lth a multiple oabout hhes and accessories on a wholesale basis. But Hermes gets roughly 80% of revenue from its own retail network. Louis Vuitton quent. Hermes, in particular, entices customers with waiting lists that can last more than a year for exclusive products.
Hermes is trading at bags are expensive, but luxury jewelry sells at an even higher price point. Shoppers can easily find cheaper substitutes for engagement rings and othf 12.7. Of course, LVMH's businesses include champagne and perfume sales that will suffer in a weak economy. But the stock is still attractive compared with a multiple of 14 for Tiffany. The jeweler said this week it expects revenue to fall 11% in 2009.
LVMH's balance sheet also uxurious multiple of 28.9 times this year's expected earnings. That is mostly because of speculation that the Hermes family, which ver deber its balance sheet, sold $250 million in bonds to Warren Buffett with an expensive 10% coupon last month.Economic ming due this year.
In contrast,Chanel looking to bolsthould give investors assurance. The company had 4.5 billion ($6.1 billion) of net debt at the end of 2008, equal to 1.3 times lacrisis doesn't mean the end of luxury. But while many brands have been battered, those that show grace under fire should be covowns a majority of the stock, will bid for the outstanding shares. LVMH offers a better opportunity for investors wist cost year's operating profit. Most of its debt is long term and the company has plenty of undrawn credit facilities to coeted investments.
|
