LVMH said revenues were stagnant in the first nine months totalling EUR 60.8 billion, on the back of a decline in third quarter sales, hindered by slower Japan growth and worsened consumer confidence in China.
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In the third quarter, the French luxury said sales fell 3 percent to EUR 19.9 billion, hurt by lower growth seen in Japan, down to 20 percent, from the previous quarter’s 57 percent growth, essentially due to the stronger yen.
In the rest of Asia, saws plummeted 16 percent in the third quarter. Sales were flat in the U.S. and up 2 percent in Europe, with both regions witnessing a deceleration in growth.
By category, LVMH’s wines and spirits business fell 7 percent in the third quarter, with Champagne sales continuing to be adversely affected post-Covid. Hennessy cognac was also held back by weak local demand in the Chinese market.
The fashion and leather goods business fell for the first time since 2020, down 5 percent for the quarter, despite Louis Vuitton and Christian Dior both logging “high visibility over the summer with the Paris 2024 Olympic and Paralympic Games,” according to the Parisian firm. The firm also noted its successful L’Or de Dior exhibition at the Guardian Art Center in Beijing, which strengthened Dior’s ties with China, while Italian quiet luxury brand Loro Piana and luxury luggage maker Rimowa, “confirmed their solid momentum,” during the three months.
The perfumes and cosmetics business was the only segment to log growth, up 3 percent for the quarter, thanks to Christian Dior fragrance, and the house’s premium makeup and skincare, with special mention also given to Guerlain fragrance. During the quarter, Fenty Beauty ventured in to haircare and expanded its retail presence in China.
Finally, the firm’s watches and jewellery segment fell 4 percent, while its selective retailing division, made up of Sephora and DFS, grew 2 percent during the quarter. Sephora performed “remarkably well” and continued to gain market share in North America, Europe and the Middle East, said LVMH.
During a call, LVMH chief financial officer Jean-Jacques Guiony said Chinese consumer confidence has slumped to the all-time lows of the Covid-19 era, though he added that the company still believed in the future of the market.
“In an uncertain economic and geopolitical environment, the group remains confident and will maintain a strategy focused on continuously enhancing the desirability of its brands, drawing on the authenticity and quality of its products, excellence in distribution and agile organisation,” said LVMH in a statement.
“LVMH will draw on its powerful brands and the talent of its teams to reinforce its global leadership position in luxury goods once again in 2024.”
A bellwether of the luxury industry, LVMH’s lacklustre earnings update is the first of the quarter and is an unnerving glimpse at what could potentially come from luxury rivals Kering, Richemont, and struggling Burberry, in the coming weeks as they present their respective earnings.