Milan, Italy – April 27, 2024: Louis Vuitton store sign in Galleria Vittorio Emanuele II in Milan. … More
LVMH just delivered a blow to investors in first quarter earnings. Organic revenues dropped 3%, from $23.4 billion (€20.7 billion) during the same period last year to $23 billion (€20.3 billion), way below estimates that projected sales to grow 2%, according to Reuters.
Investors punched back, leading to an immediate 8% drop in LVMH’s share price and for a brief time, LVMH lost its number one position as the world’s most valuable luxury company to Hermès, according to the Wall Street Journal. The news also sent other luxury brand stock prices down, including Prada, Salvatore Ferragamo, Kering, Richemont and Brunello Cucinelli.
Forbes estimates that Bernard Arnault’s fortune plunged by $9 billion to $146.5 billion, though he still held on as Europe’s richest person and is the sixth wealthiest person in the world.
Citi Bank analysts Thomas Chauvet and Mahesh Mahesh Mohankumar wrote in an investor note that LVMH’s earnings “set a negative tone for the upcoming reporting season,” and added that the earnings call provided few details on how it will mitigate pending U.S. tariff risks.
Troubles Across The Board
The LVMH wine and spirits segment declined the most, down 9% to $1.5 billion. It was hit hard by tariff uncertainties and weakening demand for cognac in the U.S. and China.
However, its much larger flagship fashion and leather goods business dropped the most in dollar terms, down over $400 million to $11.4 billion on a 5% decline. Leading brands in this segment include Louis Vuitton, Dior, Loro Piana and Fendi.
LVMH’s second largest reporting segment, selective retailing, including Le Bon Marché and beauty powerhouse Sephora, dropped 1%, to $4.7 billion and the perfumes and cosmetics business declined 1% to $2.5 billion.
However, watches and jewelry, notably Tiffany, Bulgari and Tag Heuer, remained steady year-over-year.
Across the global markets, only Europe, with a 23% share of sales, posted growth, up 2%. However, Asia (excluding Japan), its largest market representing almost a third of sales, dropped 11% and the U.S. market roughly a quarter of sales was off by 3%. However, it did note “good performance” in fashion and leather goods and watches and jewelry here. Japan posted a modest 1% decline. It accounts for 9% share of revenues.
“In a disrupted geopolitical and economic environment, LVMH remains both vigilant and confident at the start of the year,” the company said in a statement. “The Group remains focused on the development of its brands, driven by a sustained policy of innovation and investment, as well as by a constant quest for quality in its products, their desirability and their selective distribution.”
In other words, LVMH is taking the drop in sales in stride and will keep pressing forward with a long-term perspective.
Luxury Consumers Hit Pause
Chandler Mount of the Affluent Consumer Research Company, which maintains the pulse on luxury consumer purchase behavior and a firm with which I am affiliated, says that’s the right tactic to take.
“Short-term softness doesn’t imply long-term decline. Pricing power, global diversification and brand equity remain strong – this is a moment for measured confidence, not retreat,” he said, adding, “A 3% revenue dip at LVMH isn’t about product fatigue or failure. It’s about affluent consumers saying, ‘Not now.’”
The path forward for LVMH and other luxury brands spooked by current market trends is to realize there is a global “luxury-wide psychological reset, driven by uncertainty, tariffs and economic optics,” Mount continued.
“Watch sentiment, not just sales,” he advised. “The rich haven’t vanished; they’re just waiting for clarity.”
Mount continued, “To stay ahead, brands need to respond with calm, not panic: recalibrate pricing, emphasize exclusivity, focus on high-touch, low-pressure engagement, elevate the storytelling narrative and don’t resort to overexposure or discounting.
“This isn’t a demand crash, but a psychological pause. Make it feel worth waiting for,” he concluded.
See also:
