LVMH Reports Decline in Q1 Revenue Amid Luxury Industry Slowdown

LVMH Reports Decline in Q1 Revenue Amid Luxury Industry Slowdown

Fashion Giant Faces Headwinds as Growth Rates Normalize, Impacting High-End Sales

LVMH announces a 2 percent decline in overall group sales for the first quarter of 2024, citing a normalization in the growth rates of the luxury industry. Despite a 3 percent rise in like-for-like sales, the figures mark a significant slowdown compared to previous quarters.

Key divisions within LVMH show mixed performance, with organic sales in fashion and leather goods up 2 percent, in line with analyst expectations. However, the watches and jewelry segment reports a 2 percent decline, while wines and spirits see a 12 percent drop. Perfumes and cosmetics, along with selective retailing, are the outliers with sales up 7 percent and 11 percent, respectively.

“In an uncertain geopolitical and economic environment, LVMH remains both vigilant and confident at the start of the year,” states the group in a post-market statement.

LVMH Chairman and CEO Bernard Arnault, while expressing optimism earlier this year, acknowledges the need for more modest growth rates. He emphasizes the importance of brand desirability and exclusivity over chasing higher sales.

Amidst a backdrop of sluggish Chinese demand, LVMH shares have risen but face scrutiny from analysts. HSBC downgrades the stock, citing challenging market conditions and tough comparisons for the fashion and leather segment in the second quarter.

Meanwhile, luxury conglomerate Kering issues a rare profit warning, anticipating a 10 percent decline in first-quarter revenues, with flagship brand Gucci expected to record a nearly 20 percent drop year-on-year.

The results coincide with a management reshuffle at LVMH, signaling a strategic shift in leadership. Toni Belloni steps down as group managing director, to be succeeded by Stéphane Bianchi, while Michael Burke takes over as head of LVMH Fashion Group from Sidney Toledano.

At the annual general meeting, shareholders are expected to approve the appointments of Arnault’s sons, Alexandre and Frédéric, to the board. The move solidifies the Arnault family’s influence within the company, with each sibling holding key positions across LVMH brands.

With Jean Arnault, the youngest sibling, still in his mid-20s, the family continues to shape the future direction of LVMH, demonstrating a commitment to long-term succession planning.