PARIS — LVMH Moët Hennessy Louis Vuitton said net profit fell 14 percent in the first half as the slowdown in luxury spending in China continued to weigh on group sales.
The luxury conglomerate, which owns more than 75 brands including Louis Vuitton, Dior, Tiffany & Co. and Sephora, said revenues rose 1.4 percent in the second quarter to 20.98 billion euros, below a Visible Alpha consensus estimate of 21.48 billion euros.
Stripping out the impact of currency fluctuations, revenues in the three months to June 30 were up 1 percent year-over-year, indicating a slowdown from the first quarter, when organic revenues increased 3 percent.
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The key fashion and leather goods, or FLG, division posted sales of 10.28 billion euros in the second quarter, up 1 percent on a like-for-like basis versus the same period last year, below the Visible Alpha forecast for a 2 percent increase.
The division suffered from a “substantial” negative impact from exchange rate fluctuations in the first half, LVMH noted. While FLG saw profit from recurring operations fall 6 percent during the period, the operating margin remained at historically high levels, especially for its star brands Louis Vuitton and Dior, the group said.
Reporting results after the market close, LVMH said net profit totaled 7.27 billion euros in the first six months of 2024, also missing analysts’ forecasts.
Profit from recurring operations fell 8 percent to 10.65 billion euros, equating to an operating margin of 25.6 percent. Wines and spirits, together with watches and jewelry, were the two segments with the biggest declines in operating profit, down 26 percent and 19 percent, respectively.
LVMH recently named new chief executive officers at Hublot and Tag Heuer as part of a management reshuffle in the watches and jewelry division.
“The results for the first half of the year reflect LVMH’s remarkable resilience, backed by the strength of its maisons and the responsiveness of its teams in a climate of economic and geopolitical uncertainty,” Bernard Arnault, chairman and CEO of LVMH, said in a statement.
“While remaining vigilant in the current context, the group approaches the second half of the year with confidence, and will count on the agility and talent of its teams to further strengthen its global leadership position in luxury goods in 2024,” he added.
Organic sales of wines and spirits were down 5 percent in the second quarter, while watches and jewelry posted a 4 percent decrease. Perfumes and cosmetics were up 4 percent, and selective retailing rose 5 percent.
LVMH’s share price has fallen by more than 20 percent from its intra-year peak of 872.80 euros on March 14 as inflation has dampened global demand for high-end goods.
Traffic in Chinese luxury shopping malls is down in the single digits year-to-date, while luxury sales are posting double-digit declines, Bernstein said in a recent report.
Last week, Compagnie Financière Richemont said sales at constant exchange rates rose 1 percent in the April-to-June period, weighed down by a 27 percent decline in China, Hong Kong and Macao combined.
Meanwhile, Burberry reported a 20 percent decline in retail revenue at constant exchange rates and warned of an operating loss in the first half, while Swatch Group said revenue for the first six months of the year was down 10.7 percent in organic terms as the absence of Chinese tourists also impacted Southeast Asia.
French group Kering is due to unveil its second-quarter results on Wednesday, followed by Hermès International on Thursday.
