By Tassilo Hummel and Mimosa Spencer PARIS -LVMH's sales increased by 1% in the third quarter, driven by improved demand in China, offering some solace to a luxury goods sector grappling with a prolonged slump. The rise reported by LVMH on Tuesday represents the first quarter of growth this year for the world's largest luxury goods group, which is seen as a sector bellwether with operations spanning fashion, alcohol and retail. LVMH said in a statement that trends in Asia excluding Japan, a market domin ...

Group 1 - The luxury goods industry is showing initial signs of stabilization after experiencing demand slowdown and valuation declines, suggesting that the worst phase may be coming to an end [1] - Swatch AG's CEO Nick Hayek reported early signs of improvement in key markets, while Burberry's same-store sales fell only 1%, outperforming analyst expectations of a 3.7% decline, leading to a 6.6% surge in its stock price [1][2] - LVMH's upcoming financial report is expected to be disappointing, particularly due to weak performance in key categories like leather goods, which may hinder the industry's recovery pace [1][2] Group 2 - There is a significant disparity in performance among luxury brands, with Brunello Cucinelli SpA reporting an 11% sales increase in Q2, while LVMH has become one of the weakest performers due to consumer fatigue in its leather goods segment [2] - Burberry's better-than-expected results are partly attributed to a low base effect from a 21% sales drop in the same period last year [2] Group 3 - Some investors believe that the valuations of certain luxury brands have already absorbed pessimistic expectations, with LVMH's forward P/E ratio around 19.5, close to its five-year average low [3] - However, not all luxury stocks appear cheap, as Hermes has a P/E ratio of about 50 times, reflecting strong demand for its star products [3] Group 4 - Although the most severe phase of decline may be nearing its end, a full recovery in the luxury goods sector is still a distant prospect, with upcoming fashion weeks expected to provide more direction [4] - Brands that can accurately gauge consumer changes and effectively execute their strategies are likely to stand out in this differentiated recovery [4]