Ratings agency Moody’s Investors Service has raised the outlook of French luxury goods group, LVMH Moët Hennessy Louis Vuitton (LVMH) from stable to positive to “reflect its solid operating performance since the rating was awarded in July 2019”.
The ratings agency also said despite a tougher macro environment, it believes LVMH is well positioned to continue to outperform in its sector.
“The positive outlook reflects Moody’s expectations that LVMH will continue to sustain its strong operating performance, pursue a conservative financial risk management and further improve its credit metrics in the next 12 to 18 months,” the agency said.
“Moody’s assessment also takes into consideration the concentration of LVMH’s ownership, a governance structure where Bernard Arnault is LVMH’s chairman, CEO and main shareholder, creating key-person risk, as well as some debt-funded acquisition risk.”
However, Moody’s cautioned that it could downgrade LVMH’s rating if there is a significant and sustained decline in its earnings, “possibly stemming from a severe downturn of the global luxury market and a deterioration in LVMH’s key brands or in key markets.”
Arnault, who became the majority shareholder of LVMH in 1989, has amassed extraordinary wealth over the years.
He is today ranked as the second-richest person in the world with an estimated wealth of $159-billion, behind Twitter and Tesla boss Elon Musk. He is also the richest person in Europe.
The group owns more than 60 luxury brands, including Moët & Chandon, Christian Dior, Louis Vuitton and Hennessy. It also owns TAG Heuer watches and Dom Perignon champagne.
