LVMH weathers luxury market slowdown as fashion business bolsters sales

By Louis Goss

LVMH Moet Hennessy Louis Vuitton shares increased 3% on Wednesday after the company posted an increase in its organic revenues in the face of a slowdown in demand for sparkling wine and jewelry that has hit the firm's main rivals in the luxury sector.

The Parisian company, which owns brands including Christian Dior and Tiffany & Co, posted results that were roughly in-line with analysts' expectations, as higher sales from its core fashion & leather goods segment offset falling sales elsewhere.

Shares in LVMH (FR:MC) listed on the Euronext Paris stock exchange increased 3% on Wednesday having increased by 11% in the year-to-date.

The luxury conglomerate posted a 3% increase in its first-quarter organic revenue, to EUR20.7 billion, driven by a 2% increase in sales from its leading fashion & leather goods segment, to EUR10.5 billion, which accounts for the majority of firm-wide revenue.

LVMH's sales were also boosted by a 7% increase in sales from its perfume & cosmetics segment, to EUR2.2 billion, and an 11% surge in sales from its selective retailing unit -- which owns makeup seller Sephora and duty free retailer DFS -- to EUR4.1 billion.

Those increases offset a 12% drop in sales from its wines & spirits business, to EUR1.4 billion, and a 2% fall in sales from its watches & jewelry segment, to EUR2.5 billion, following a slump in demand for Champagne and cognac in the wake of COVID-19.

LVMH's results follow warnings from a raft of its top rivals, including British fashion house Burberry (UK:BRBY) and Gucci owner Kering (FR:KER), that the global slowdown in the luxury goods market would lead to major drops in their sales.

LVMH's sales were bolstered by a 32% increase in revenue from its Japanese business, alongside a 2% uptick in its sales in both Europe and the U.S.

Those increases worked to offset a 6% slump in sales in Asia outside of Japan, which LVMH blamed on Chinese tourists spending their money outside of the country, in places including Europe and Japan.

The luxury goods company noted sales from its wines & spirits business were impacted by soft demand for its Hennessy cognac over the lunar new year and a slowdown in demand for its Champagne in Europe compared to high levels at the start of 2023.

-Louis Goss

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04-17-24 0433ET

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