LVMH hit by sales slowdown in Japan and China

A slowdown in sales in Japan and China has caused the world’s largest luxury group to suffer its first fall in quarterly sales since the pandemic.
Revenue at LVMH, the French conglomerate which owns Bulgari and Moët & Chandon champagne among other high-end brands, fell 3 per cent to €19.08 billion on an organic basis in the three months to the end of September. The group missed consensus estimates of 2 per cent organic growth, according to Barclays.
The fashion and leather goods division, which comprises the Louis Vuitton and Dior labels, reported a 5 per cent drop, below consensus estimates of 4 per cent growth and the first decline for the business since 2020 during the height of the pandemic.
The downturn marks a rare reversal for the company, which is seen as a bellwether for the wider luxury goods industry. Shares in the business closed down €12.40, or 1.9 per cent, to €625.40 in Paris on Tuesday.
LVMH said the revenue decline “mainly arose from lower growth seen in Japan”, as a stronger yen dampened buying by Chinese consumers who travelled there to shop for cheaper luxury items.
Like other companies in the luxury sector, the French luxury giant has seen a pullback in demand among Chinese shoppers over the past year amid worries over slowing economic growth and a property market crisis.
Organic sales in the region that includes China fell 16 per cent in the quarter, a disappointment for a group that had been among the most resilient in the face of cooling demand in the country.
The recent drop in Chinese sales has knocked billions of euros off the market capitalisation of LVMH and other luxury groups and the fortunes of their billionaire owners.
LVMH’s shares have lost around a quarter of their value since March, valuing the group at around €320 billion. However, they are still worth double what they were at the start of the pandemic in March 2020.
Bernard Arnault, whose family own 48 per cent of LVMH and nearly 64 per cent of the voting rights, rode the luxury wave to be crowned the world’s richest person in December 2022. He has since dropped back to fourth-richest on Bloomberg’s billionaire’s index, with a $190 billion fortune.