After achieving record revenues of 79 billion euros in 2022, LVMH plans to acquire its own shares for a maximum amount of 1.5 billion euros, which will subsequently be canceled. This practice could increase the value and net earnings of the remaining shares.
The acquisition of its own shares for a maximum amount of 1.5 billion euros is the significant financial operation that LVMH is about to launch today, and it could last until July 20, 2023. The world leader in luxury goods has entrusted the share buyback operation to an investment services provider. The group led by magnate Bernard Arnault announced in a statement that the repurchased shares will be canceled, without providing more detailed information on the reasons that motivated this move. However, it is foreseeable that the decision was made following the record results of the 2022 fiscal year.
It is common for companies in such situations, with excess cash, to decide to buy back and then cancel their own shares to increase the value and net earnings of the remaining shares. This practice has become widespread; a report by BNP Paribas estimates that in 2022, share buybacks nearly doubled compared to the previous year, both in Europe and the United States. The practice is entirely legal but strictly regulated by financial market regulatory authorities, such as the AMF in France (Financial Markets Authority). This control is exercised to ensure a balanced treatment of all shareholders and to prevent the possibility of artificially influencing stock prices. This operation could be repeated at a regular pace in the years to come.
A study by consulting firm Bain & Company reveals that the global luxury goods market showed a 21% increase in sales in 2022, amounting to 1,384 billion euros. The sale of personal luxury goods, such as clothing, watches, and jewelry, is expected to see a final jump of 22% and growth of 3% to 8% in 2023 despite inflation and ongoing market difficulties due to the pandemic and geopolitical upheavals.
LVMH, the global leader in luxury goods with its 75 exceptional houses, achieved record revenues of 79 billion euros in 2022, of which 8% was in France. According to an analysis by asset manager Janus Henderson, in 2022, LVMH became the second-largest dividend payer in France, after TotalEnergies.
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