LVMH sales unexpectedly fell at its biggest unit for the first time since 2020 as the scale of the pullback in Chinese luxury demand over the past year becomes clearer.
Organic revenue at the key fashion and leather goods unit fell 5% in the third quarter, LVMH Moët Hennessy Louis Vuitton SE said in a statement Tuesday. Analysts had expected a small gain. The drop compares with 9% growth a year earlier at the unit, which houses brands such as Celine, Fendi and Loewe.
LVMH’s American depositary receipts dropped as much as 10% in New York after the announcement.
Consumers in China have reined in spending on costly goods amid worries over slowing economic growth and a property market crisis — concerns that prompted the Chinese government to unveil a package of measures last month to revive the economy.
Organic sales in the region that includes China fell 16% in the quarter, more than estimates, a disappointment for a group that had been among the most resilient in the face of cooling demand in the country. Sales in Japan also performed worse than expected as a stronger yen damped buying by Chinese consumers who traveled there to shop for luxury items.
A pandemic-era spending boom that drove luxury sales ran out of steam last year, especially for brands catering to so-called aspirational customers. The most exclusive brands such as Hermes International SCA — which reports quarterly sales next week — have better withstood the downturn.
Run and controlled by Bernard Arnault, the world’s fifth-richest person, LVMH has some 75 luxury brands spanning fashion, jewelry, hotels and spirits. All of the group’s main units missed analysts’ estimates in the third quarter.
