Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

LVMH sales growth slips on luxury spending slowdown

Published 04/16/2024, 11:49 AM
Updated 04/17/2024, 12:51 AM
© Reuters. FILE PHOTO: The logo of LVMH is seen at the Viva Technology conference dedicated to innovation and startups at Porte de Versailles exhibition center in Paris, France, June 15, 2023. REUTERS/Gonzalo Fuentes/File Photo

By Mimosa Spencer and Dominique Patton

PARIS (Reuters) -LVMH's sales slowed in the first quarter as rising prices prompted more shoppers who aspire to own its luxury labels to hold back on splashing out thousands of dollars on handbags and other accessories.

Slower sales growth of 3% reflected comparisons with the same quarter in 2023, when sales were boosted by the lifting of COVID-19 curbs in LVMH's key market of mainland China and comes amid worries about a prolonged global slowdown which has knocked shares in luxury companies over the past year.

The world's largest luxury group, owner of Louis Vuitton, Tiffany & Co (NYSE:TIF). and Bulgari, said on Tuesday that sales for the quarter ending in March rose 3% on an organic basis to 20.69 billion euros ($22 billion), matching analyst expectations.

On a reported basis, sales at the group were down 2%, largely due to currency effects.

LVMH, which is Europe's second-largest listed company and worth nearly 400 billion euros, is the first luxury goods maker to report quarterly earnings, setting the tone as worries grow about demand in China, the world's No. 2 economy.

Gucci-owner Kering (EPA:PRTP) last month issued a surprise warning that first quarter sales would slump 10%, with sharp declines in Asia, casting uncertainty for the sector's outlook.

LVMH said its Asia sales, excluding Japan, were down 6%, with growth of 2% in both Europe and the United States.

The results were "broadly OK" against the most difficult comparison period of the year, said analysts at Bernstein, and would likely support LVMH's stock.

Higher growth rates should start to kick-in in the second quarter, they added.

The luxury industry is adjusting to slower demand after a period of stellar sales growth following the pandemic, when shoppers emerged from lockdowns with extra savings and a pent-up desire to treat themselves.

Barclays predicts growth rates will slow to mid single digits this year, down from nearly 9% in 2023 and double digits the previous two years.


Travelling Chinese shoppers are expected to fuel growth, although investors are increasingly nervous about recovery in China itself, where property price falls and youth unemployment have dampened demand for high-end fashion and leather goods.

LVMH Chief Financial Officer Jean-Jacques Guiony said he was "quite happy" with Chinese demand.

Purchases of Louis Vuitton products by Chinese buyers globally grew by around 10%, he said, with an increasing proportion outside mainland China as they resume travelling, particularly in Japan and to some extent in Europe.

LVMH's fashion and leather goods division, which includes Louis Vuitton and Dior, saw sales climb 2%, matching forecasts.

Sales in the division, which sells small Lady Dior handbags priced at 5,400 euros and roomy Louis Vuitton Speedy bags for 10,000 euros, had risen by 9% year-on-year the previous quarter.

In the U.S, LVMH has seen "continuous strength" from clients at the top end and "very gradual improvement" from aspirational customers, who continue to be impacted by inflation, Guiony said in a call with analysts.

It will take time for these customers to adapt to the higher prices implemented by the industry in recent years, he added.

LVMH, whose activities span spirits, jewellery, cosmetics and fashion and is regarded as a bellwether for the wider luxury goods industry, does not give a breakdown for its brands.

© Reuters. FILE PHOTO: A Lady bag and a pair of boots are pictured in the newly opened Dior boutique in Geneva, Switzerland, March 13, 2024. REUTERS/Denis Balibouse/File Photo

Its shares have been volatile since signs of a luxury slowdown emerged, and are down 11% over the past year.

Shares of Kering, which is revamping Gucci, and Burberry are down 40% and 55%, respectively. Hermes, meanwhile, has outpaced rivals as the ultra-rich continue to splurge on the label's high-priced Birkin handbags, with shares up 16% over the year.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.