On September 15, French luxury conglomerate LVMH (Moët Hennessy Louis Vuitton) announced its third-quarter results for 2024. Although overall sales reached €19.076 billion (approximately $21 billion), organic sales declined by 3%, falling significantly short of analysts’ expectations.
The 5% sales drop in the company’s core Fashion & Leather Goods division was particularly impactful. LVMH, which owns powerful brands like Louis Vuitton, Christian Dior, and Loewe, usually leads the luxury market. However, this decline suggests a drop in consumer purchasing power, which could spell even tougher times ahead for smaller competitors.
In addition, sales in Asia (excluding Japan) fell by 16%, largely due to weakened consumer confidence in China. Meanwhile, Japan remains an important market for Chinese travelers, benefiting from the weak yen, though its growth rate slowed sharply from 57% in the second quarter to 20% in the third quarter.
LVMH pointed out that the gradual cooling from the post-pandemic growth boom, combined with macroeconomic headwinds and price hikes, had an impact on sales. The company’s Chief Financial Officer (CFO), Jean-Jacques Guiony, defended the price increases, stating, “Do you really think that if we had not increased prices the way we have done, we would be doing double digit today? I really don’t think so.”
The Wine & Spirits division also saw a 7% decline in sales, primarily due to the sluggish demand for cognac in the Chinese market. Additionally, a poor champagne harvest next year could pose further challenges.
LVMH plans to continue its strategy of enhancing brand desirability, but this latest performance reflects the tough environment the company is facing. With demand in key markets still weak, a full recovery is expected to take time.