DFS parent lowers profit forecast
Bloomberg News Service
Paris LVMH, the biggest maker of luxury products and parent company of DFS, blamed terrorist attacks when cutting its profit forecast yesterday.
The French maker of Louis Vuitton luggage isn't the first company to do so and won't be the last, investors said.
Although LVMH cut its outlook, the French company still expects to be profitable.
LVMH Moet Hennessy Louis Vuitton SA said operating profit likely will rise as little as 5 percent instead of more than 10 percent as previously forecast, because the assault may hurt already-slowing demand.
In the United States, Lands' End Inc. said calls to catalog centers have dropped by as much as 75 percent since Tuesday.
"There's the initial shock on business and then the longer-term effect as a result of changes in confidence," said Louis Chaillet, who helps manage $3 billion in equities at Artsen Pensioenfonds in Utrecht, Netherlands.
The sluggish economies of Europe and the United States already had crimped business travel and tourism, dashed consumer confidence in many countries and prompted companies to fire workers and cancel orders to save money. Growth may be even harder to come by now, though perhaps only in the short term, according to Fortis Bank.
"Americans are likely to feel numbed for several weeks," Fortis said in a research report. "What we are likely to see will to a large extent be a postponement rather than a scrapping of consumption."
Fortis said it expects a rebound in consumer confidence later this year.
The pessimistic comments from LVMH and from other companies pushed down some European stocks. LVMH shares have lost 17 percent since Monday.
"LVMH has been expanding quite fast," said Scilla Huang Sun, who manages a 70 million-euro ($63 million) luxury-goods fund at Clariden Bank. "Now, with the economies slowing and with this tragedy in the U.S., they should take a more conservative approach."