LVMH shares slump on signs the post-COVID luxury boom is over

By Louis Goss

LVMH Moët Hennessy Louis Vuitton shares fell on Wednesday on fears the luxury conglomerate is starting to be hit by the wider slowdown in the market for expensive goods after it reported a slump in second quarter sales.

The French firm, which has so far held out against the broader slowdown in the luxury goods market, posted second quarter revenue worth EUR20.98 billion ($22.73 billion), marking a 1% drop on its sales in the second quarter of 2023.

The results saw LVMH fall just short of expectations, with nine analysts having previously forecast the conglomerate would post sales worth EUR21.54 billion, FactSet data shows.

LVMH, which owns brands including Christian Dior, Bulgari, and Tiffany & Co, previously saw its sales boom in 2023 on the back of surging demand for luxury goods in the wake of the COVID-19 pandemic and the opening up of international travel.

Shares in LVMH Moët Hennessy Louis Vuitton (FR:MC), listed on the Euronext Paris stock exchange, fell 4% on Wednesday having fallen 18% over the previous 12 months.

Bernard Arnault, the luxury conglomerate's CEO and largest shareholder, pointed to the "climate of economic and geopolitical uncertainty" for the slowdown in LVMH's sales as the company also noted a "normalization" of the wine & spirits market after the post-COVID surge.

The luxury giant's second quarter sales were hit most sharply by a 14% drop in sales from its China-dominated Asia excluding Japan business, which accounted for 30% of its revenue in the first half of 2024 making it LVMH's largest geographical unit.

This slump was partially offset by a 57% increase in sales in Japan and a 4% increase in sales in Europe, which LVMH said was driven by high levels of spending by Chinese tourists amid historic weakness in the value of the Japanese yen.

LVMH reported a 12% drop in sales from its wine & spirits segment, to EUR2.81 billion, a 5% drop in sales from its watches & jewelry division, to EUR5.15 billion, and a 2% drop in sales from its largest fashion & leather goods segment, to EUR20.77 billion.

Those slumps offset higher sales from LVMH's perfume & cosmetics segment - which increased 3% to EUR4.14 billion - and from the luxury firm's selective retail unit - which also jumped 3% to EUR8.63 billion - leading to the 1% slump.

LVMH's results also pulled down stocks in rival luxury goods sellers in a slump that saw Prada (HK:1913) plunge 5%, Gucci-owner Kering (FR:KER) drop 3%, Cartier-owner Compagnie Financiere Richemont (CH:CFR) slip 1%, and Hermes International (FR:RMS) fall 1%.

-Louis Goss

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07-24-24 0547ET

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