Shares of luxury conglomerate LVMH experienced a 5.9% drop on Wednesday, trading at EUR 690.10 (EUR 1 = $1.05) following the company's Q3 results that revealed a slowdown in sales growth. This decline is casting a shadow over the luxury sector, and has been attributed to inflation and high interest rates impacting consumer spending.
The company's year-on-year organic growth fell to 9%, a substantial decrease from Q2's 17%, and below the analysts' estimate of 11%. This downturn is largely due to moderating growth in Europe and most Asia Pacific regions, contrasting with broadly stable sequential trends in the U.S. and Japan.
Berenberg analysts have indicated that such exceptional growth was not sustainable, predicting an impending 'normalization'. They noted ongoing uncertainty about when sales and margin trends will stabilize, sparking discussions regarding what the 'new normal' might be for LVMH in 2024 and beyond.
The luxury sector is closely watching these developments as they unfold, with LVMH's performance often considered a bellwether for the industry. The impact of inflation and high interest rates on consumer spending will continue to be a key focus for investors as they assess the future prospects of the luxury goods market.
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