LVMH Moet Hennessy Louis Vuitton SA, the maker of Celine handbags and TAG Heuer watches, sees no sign of a slowdown in demand for luxury goods after reporting first- half profit that beat analysts' estimates.

Net income climbed 25 percent to 1.31 billion euros ($1.9 billion), the Paris-based company said in a statement after the market closed yesterday. The average estimate of five analysts surveyed by Bloomberg was for profit of 1.25 billion euros.
Second-quarter sales advanced 9 percent to 5.05 billion euros.

"LVMH's performance is of great quality in our view given the tougher basis of comparison" in the second quarter, Thomas Chauvet, an analyst at Citigroup in London, wrote today in a note. He recommends buying the stock.

The world's largest maker of luxury goods has waiting lists for some of its leather products and plans to introduce new models of watches in the second half. LVMH agreed to buy Bulgari SpA in March and snapped up a stake in Hermes International SCA to benefit from surging demand for $7,000 Birkin bags $2,700 pink gold bracelets.

"We approach the second half of the year with confidence and are relying upon the creativity and quality of our products as well as the effectiveness of our teams to pursue further market-share gains," LVMH Chief Executive Officer Bernard Arnault said in a statement.

LVMH rose 50 euro cents to 130.5 euros at 9:27 a.m. today in Paris. The shares have gained 5.9 percent this year, giving the maker of Moet & Chandon champagne and $6,000 TAG Heuer chronographs a market value of 65.4 billion euros. The company will pay an interim dividend of 80 cents on Dec. 2.

LVMH, which first disclosed it had built up stake in Hermes in October, now owns 21.4 percent of its Paris-based rival, up from 20.2 percent at the start of the year, its finance director said on a conference call yesterday.

Eoin Treacy's view Global growth remains at approximately, 3% per annum. It's considerably higher in Asia. Annual population growth is approximately 1%, globally. Economic growth is therefore outstripping population growth by a wide margin in Asia. Countries exhibiting improving standards of fiscal, economic and corporate governance have succeeded in nurturing their respective middle classes. An increasing number of people, particularly in China, but also elsewhere are migrating from the middle classes to the high disposable income bracket. This is helping to drive demand for luxury goods of all kinds.

There is a high degree of commonality across the luxury brand sector. Polo Ralph Lauren, Essilor International, Luxottica, PPR, Christian Dior, Swatch, Coach, Tod's and LVMH are all in the process of breaking out from medium-term ranges. While a number are slightly overextended relative to their respective 200-day MAs, sustained breaks of their progressions of higher major reaction lows would be required to begin to question medium-term uptrend consistency.

BMW, Burberry (developing weekly key reversal) , Remy Cointreau, Tiffany, Mulberry and especially Hermes are all becoming increasingly overextended relative to their 200-day MAs and the potential for mean reversion is rising considerably.

Richemont is one of the few to have fallen over the last couple of weeks. It has returned to test the 200-day MA and the medium-term upside can continue to be given the benefit of the doubt provided it demonstrates a return to demand dominance above or in the region of CHF50.

Saks Inc is also noteworthy. It remains in a consistent, medium-term uptrend and has returned to test the 200-day MA, where it appears to have found at least short-term support. A sustained move below $10 would question the consistency of the advance.

Also see Comment of the Day on March 8th.