LVMH Moët Hennessy Louis Vuitton, the luxury sector bellwether, missed market expectations with a 4.4 percent drop in revenues in the third quarter due to lower growth in Japan as the yen recovered from its recent weakness.
Reporting results after the market close, the world’s largest luxury group said revenues totaled 19.07 billion euros in the three months to Sept. 30, below a Visible Alpha consensus estimate of 20.01 billion euros.
Stripping out the impact of currency fluctuations, sales were down 3 percent year-on-year, indicating a slowdown from the second quarter, when organic revenues increased 1 percent.
The key fashion and leather goods, or FLG, division posted sales of 9.15 billion euros in the third quarter, down 5 percent on a like-for-like basis versus the same period last year, sharply below the Visible Alpha forecast for a 1 percent increase.
Organic sales of watches and jewelry were down 4 percent in the third quarter, while wines and spirits posted a 7 percent drop. On the bright side, perfumes and cosmetics were up 3 percent, and selective retailing rose 2 percent.
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Uncharacteristically, the press release did not include a quote from chairman and chief executive officer Bernard Arnault. LVMH merely reiterated its guidance for the year.
“In an uncertain economic and geopolitical environment, the group remains confident and will maintain a strategy focused on continuously enhancing the desirability of its brands, drawing on the authenticity and quality of its products, excellence in distribution and agile organization,” it said.
“LVMH will draw on its powerful brands and the talent of its teams to reinforce its global leadership position in luxury goods once again in 2024,” added the luxury conglomerate, which owns more than 75 brands including Louis Vuitton, Dior, Tiffany & Co. and Sephora.
The fortunes of luxury stocks have been closely tied to China’s announcements regarding economic stimulus measures designed to counter flagging growth linked to factors including a slumping property market and high youth unemployment.
The world’s second-largest economy, a key motor of luxury consumption, is at risk of missing its target of around 5 percent growth in 2024, analysts say.
LVMH’s share price has fallen by 27 percent from its intra-year peak of 872.80 euros on March 14 as inflation has curbed discretionary spending.
LVMH is the first major player to report third-quarter sales, setting the tone for the rest of the sector. French group Kering is due to unveil its third-quarter figures on Oct. 23, followed by Hermès International on Oct. 24.
