LVMH (EU:MC) shares fell more than 1% on Tuesday after the French luxury goods group reported a decline in third-quarter sales at its fashion and leather goods division, reflecting weaker demand in China despite growth across several other business segments.
The company reported third-quarter revenue of €18.5 billion, slightly exceeding analyst consensus expectations of €18.46 billion. Organic revenue increased 1% during the period, supported by growth in the United States, Europe and Japan.
For the first nine months of the year, group revenue reached €57.1 billion, representing a 2% decline on a reported basis but a 2% increase at constant exchange rates and scope.
The group’s fashion and leather goods division, its largest business segment, recorded a 5% decline in organic revenue during the third quarter.
Divisional revenue fell to €8.25 billion from €8.5 billion in the corresponding period last year, as slower spending in China offset continued demand in the US market.
The performance of the division weighed on investor sentiment, given its substantial contribution to LVMH’s overall revenue.
The decline also highlighted differences in luxury consumer demand across geographical markets, with stronger trading in Western markets and Japan contrasting with weaker conditions in China.
Other LVMH divisions reported positive organic growth during the quarter.
Watches and jewellery revenue increased 6% organically, supported by demand for jewellery collections.
Tiffany & Co. continued developing its HardWear, Knot and Sixteen Stone product lines, while Bvlgari reported record revenue from its new Eclettica high jewellery and watch collection.
Selective retailing delivered the strongest divisional performance, with organic revenue increasing 8%.
Sephora gained market share in several countries, supported by exclusive product introductions, including the Rhode brand.
The beauty retailer also expanded its geographical presence by entering Belgium and Croatia during the period.
LVMH’s wines and spirits division reported organic revenue growth of 6%, reflecting improvements in demand across selected markets.
Champagne sales continued to recover, particularly in Europe, while Hennessy cognac recorded positive momentum in Asia.
The perfumes and cosmetics business generated organic revenue growth of 1%, supported by new product launches.
These included Dior’s J’adore Intense and Sauvage Extrait fragrances, which contributed to activity within the division.
The results demonstrated varying performance across LVMH’s portfolio, with growth in selective retailing, watches and jewellery, wines and spirits, and perfumes and cosmetics offsetting part of the decline in fashion and leather goods.
However, the weakness in the group’s largest division remained a significant factor in the overall quarterly performance.
LVMH’s geographical results also reflected different consumer spending conditions, with growth in the US, Europe and Japan helping compensate for softer demand in China.
The company continues to operate across a broad range of luxury categories, including fashion, leather goods, jewellery, watches, fragrances, cosmetics, wines and spirits, and specialist retailing.
Looking ahead, LVMH acknowledged continued uncertainty in the global economic and geopolitical environment.
The group said it remained confident in its strategy, which focuses on strengthening the appeal of its brands, maintaining product quality and developing its retail operations.
Management also highlighted the importance of organisational flexibility as it responds to changing market conditions.
The third-quarter figures indicate that LVMH continues to generate growth across several business areas, although weaker Chinese demand remains a challenge for its fashion and leather goods operations.
Investors will continue to assess the pace of recovery in Chinese luxury spending, the sustainability of demand in the US and Europe, and the contribution from the group’s other divisions.
About LVMH
LVMH Moët Hennessy Louis Vuitton is a French multinational luxury goods group operating across fashion and leather goods, watches and jewellery, perfumes and cosmetics, wines and spirits, and selective retailing.
Its portfolio includes Louis Vuitton, Dior, Tiffany & Co., Bvlgari, Hennessy and Sephora, among other international brands.
The company operates globally through boutiques, retail networks and distribution channels serving customers across major luxury markets.
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