On July 23, French luxury giant Moët Hennessy Louis Vuitton (LVMH Moet Hennessy – Louis Vuitton SE) reported resilience in its latest financial results, achieving 2% organic growth in the first half of 2024. However, due to the recent slowdown in the luxury fashion market, the results fell short of analysts’ expectations of a 2.89% increase, marking the lowest growth rate since 2009, excluding the pandemic period.
LVMH’s revenue for the first half of 2024 amounted to €41.7 billion ($45.2 billion), a 1% decrease compared to the same period last year. In the second quarter, the company recorded sales of €20.9 billion ($22.7 billion), a 1% increase year-on-year. However, these figures did not meet analysts’ forecasts of €42.3 billion ($45.9 billion) for the first half and €21.5 billion ($23.3 billion) for the second quarter.
Following this announcement, LVMH’s stock price fell by as much as 6.5%. The poor performance of the market leader highlighted the tough realities faced by the luxury industry.
One major factor behind the sluggish sales is the decline in consumer spending in the Chinese market, which had shown double-digit growth last year. Sales in the Asian market, excluding Japan, fell by 14% in the second quarter, worsening from a 6% decline in the first quarter.
Conversely, the Japanese market continued to show growth, driven by an increase in tourist purchases due to the weaker yen. However, the weaker yen also led to lower product prices, and the potential rise in store rents alongside sales growth put pressure on profit margins.
Jean-Jacques Guiony, Chief Financial Officer, noted the difficulty in predicting the outlook for the Chinese market. However, he added that the strong demand for LVMH products among Chinese tourists visiting Japan indicates a robust underlying demand.
LVMH Chairman and CEO Bernard Arnault commented in a statement: “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,” he added, “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.”
Despite the overall downturn in the luxury industry, Hermès and Brunello Cucinelli have posted strong performances. In contrast, Gucci and Burberry, which have seen significant drops in sales, continue to struggle to find a path to recovery and face unprecedented challenges.