Shares of French luxury conglomerate LVMH are demonstrating a notable reversal of fortune. Following an extended period of downward pressure, the equity is showing signs of a potential recovery, driven by a significant and unexpected strategic shift from its flagship brand, Louis Vuitton. The label is making an ambitious entry into the cosmetics industry, raising questions about whether this move can revitalize its underperforming fashion and leather goods division.
A Strategic Pivot into Cosmetics
The catalyst for this renewed investor confidence appears to be a strategic surprise. In a departure from its traditional focus, Louis Vuitton is launching its own dedicated makeup line, “La Beauté.” This calculated expansion is a direct response to persistent softness in the core luxury fashion sector. By venturing into the high-growth beauty market, LVMH is tapping into a segment that has historically proven more resilient to economic downturns than its core business of handbags and shoes. The sales rollout is scheduled to begin in China on August 20, followed by a subsequent global launch, with the company positioning its products at the premium end of the market.
Should investors sell immediately? Or is it worth buying LVMH?
Technical Indicators Show Tentative Stabilization
This strategic news arrives after a difficult stretch for LVMH’s share price, which had been contending with a pronounced bearish trend. Key moving averages had been pointing downward, with the 50-day average situated near €520 and the 200-day average at approximately €590—traditionally a concerning signal for market participants. The recent advance of 1.6% to around €483 is therefore a welcome development for shareholders.
From a technical analysis perspective, conditions are showing early signs of stabilization. A crucial support level at €470 has held firm so far, while the next significant resistance level to watch is positioned at €510. The Relative Strength Index (RSI), hovering around the 45 mark, suggests the stock is in neutral territory—neither overbought nor oversold—indicating there is potential for further movement in either direction. The market’s initial reaction to this diversification strategy has been positive, though its long-term efficacy remains to be seen.
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