LVMH Moët Hennessy Louis Vuitton, a major player in the luxury industry, fell short of market expectations, reporting a 4.4% drop in revenue for the third quarter. This decline was largely attributed to slower growth in Japan, where the yen has started to regain some strength after a period of weakness.
After the market closed, the world’s largest luxury group shared its latest results, revealing that revenues reached INR 1.7 lakh crore (19.07 billion euros) for the three months ending September 30. This figure fell short of the Visible Alpha consensus estimate of INR 1.8 lakh crore (20.01 billion euros).
When accounting for currency changes, sales dropped by 3% compared to last year. This shows a slowdown from the second quarter, where organic revenues had a slight rise of 1%.
The fashion and leather goods division reported sales of INR 83735 crore (9.15 billion euros) in the third quarter, reflecting a 5% decline compared to the same period last year. This was a significant drop from the Visible Alpha forecast, which had anticipated a 22% increase.
In the third quarter, organic sales for watches and jewelry slipped by 4%, while wines and spirits saw a 7% drop. On a more positive note, perfumes and cosmetics grew by 3%, and selective retailing saw a modest 2% increase.
Surprisingly, the press release didn’t feature a statement from chairman and CEO Bernard Arnault this time. Instead, LVMH simply reaffirmed its outlook for the year.
“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 organization,” it read. “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.”
The performance of luxury stocks has been closely linked to China’s efforts to boost its economy, with measures aimed at addressing slowing growth caused by issues like a weak property market and high youth unemployment.
While luxury spending in Japan and China is on a downward trend, the horizon seems rather bright for India. In 2024, the luxury goods market in India is valued at INR 1.4 lakh crore ($17.67 billion), with an expected annual growth rate of 3.17% (CAGR 2024-2029). The largest share comes from luxury watches and jewelry, accounting for INR 95120 crore ($11.32 billion) this year.
LVMH’s share price has dropped by 27% since hitting its yearly high of INR 79,000 (872.80 euros) on March 14, as rising inflation has put a dent in discretionary spending.
LVMH is the first major company to announce its third-quarter sales, giving an early glimpse into how the luxury sector is performing. Kering is set to release its results on October 23, followed by Hermès on October 24.
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