LVMH Reports Sales Slowdown Amid Growing Chinese Demand Decline

LVMH, the world's largest luxury group, reported a slowdown in its quarterly sales growth, impacted by declining Chinese demand and champagne sales, with a 6% drop in sales in Asia excluding Japan. The U.S. and Europe saw a 2% increase, while Japan recorded a 32% rise. Despite the current economic impact on the luxury industry, LVMH's performance remained strong compared to its rivals, with a forecast of 1-4% growth for personal luxury goods in 2024. LVMH's shares rose by over 2% in morning trading, reflecting positive investor sentiment.

Last year, Luxury brands experienced a surge in purchases during China's Singles Day shopping festival, but some faced significant losses as consumers returned or canceled purchases shortly after the event. In its first-quarter results, LVMH reported a 10% increase in demand from wealthy Chinese shoppers in Japan, signaling a growing market for luxury goods beyond Chinese borders, supported by positive signs of spending on luxury items by wealthy Chinese consumers outside of China.

Key Takeaways

• LVMH reported its weakest quarterly sales growth since the pandemic recovery, with declining Chinese demand and champagne sales.
• The U.S. and Europe experienced a 2% increase in sales, while Asia saw a 6% drop.
• LVMH's fashion and leather goods division witnessed a significant slowdown, with a 2% growth compared to the previous 18% growth.
• LVMH's portfolio enjoyed a 10% increase in demand from Chinese shoppers during the first quarter, including purchases made outside China.
• Despite a decline in like-for-like sales, LVMH's overall organic sales grew by 3% to €20.7bn in the first quarter.

Analysis

LVMH's recent quarterly sales slowdown can be attributed to declining Chinese demand and champagne sales. This has resulted in a 6% drop in sales in Asia excluding Japan, impacting the luxury group's fashion and leather goods division. While the U.S. and Europe saw a 2% increase, Japan recorded a 32% rise. The consequences of this slowdown may include decreased profits and market share in Asia, while benefiting the U.S. and Japan. LVMH's performance, despite the pandemic's impact, suggests resilience in the luxury industry. In the long term, the company may need to realign its strategies to adapt to shifting consumer behaviors and market dynamics in Asia. This news could affect investor sentiment, impacting LVMH's shares and financial performance.

Did You Know?

• LVMH's fashion and leather goods division witnessed a significant slowdown, with a 2% growth compared to the previous 18% growth.
• LVMH's portfolio enjoyed a 10% increase in demand from Chinese shoppers during the first quarter, including purchases made outside China.
• Despite a decline in like-for-like sales, LVMH's overall organic sales grew by 3% to €20.7bn in the first quarter.