PARIS (Reuters) -French luxury giant LVMH announced a 3% decline in third-quarter sales on Tuesday, marking its first quarterly sales drop since the pandemic. This decline raised investor concerns, particularly as demand weakened in key markets like China and Japan. Despite this decline, LVMH luxury goods continue to hold a significant position in the global market. #LVMHLuxuryGoods
For the three months ending in September, LVMH generated 19.08 billion euros ($20.8 billion) in revenue. This represents a 3% fall on an organic basis, excluding currency fluctuations, acquisitions, and divestitures.
The reported revenue figure fell short of analysts’ expectations, which anticipated a 2% organic growth according to Barclays. This miss highlights the ongoing challenges facing the luxury market.
The group “badly” undershot expectations, with “misses across the board,” said Luca Solca, an analyst at Bernstein.
The sales report marks the first quarterly update from major luxury companies and follows a turbulent period for luxury stocks. Recent stimulus measures in China had briefly raised hopes for a market recovery.
LVMH Chief Financial Officer Jean-Jacques Guiony stated that Chinese consumer confidence has fallen to its lowest point since the COVID-19 pandemic. However, he emphasized that the company remains optimistic about the market’s future.
Despite the drop in LVMH’s sales and a more significant decline at the smaller Italian firm Ferragamo, these results are unlikely to stabilize the market. #LVMHLuxuryGoods
“LVMH being the sector proxy for many, this print will inevitably cause more short-term volatility,” said Flavio Cereda, co-manager of GAM’s Luxury Brands investment strategy, a fund that owns shares in luxury stocks.
Adapting to Change: LVMH Luxury Goods Strategy for Growth Amid Market Challenges
LVMH’s Chief Financial Officer expressed optimism about the long-term potential in China. However, the current consumer confidence remains low, which poses challenges. Moreover, other luxury brands, like Ferragamo, are also experiencing sales declines. As a result, the overall luxury market may struggle to regain stability. LVMH luxury goods need to adapt to these changing market conditions to maintain growth.
