the French luxury giant dependent on slowing Asian growth

A first since Covid, sales of LVMH, the world number one in French luxury, are declining. A slight slowdown which questions shareholders about the solidity of the group, in an uncertain economic context for the sector.

The fall is not dizzying. In the third quarter, between July and September 2024, Bernard Arnault’s group achieved a turnover of 19 billion euros, compared to 20 billion in 2023 for the same period. But after exceptional years for the group, the trend raises questions and concerns. The stock of luxury giant LVMH plunged more than 5% on the morning of Wednesday October 16 on the Paris Stock Exchange.

This slight drop in sales takes place in a context of slowdown in the luxury market worldwide. The sector continues to progress, but less quickly than before, due to Asian growth, and particularly Chinese growth, which continues to weaken. This new consumer market is, however, the main driver of the sector in recent years.

The turnover of the fashion and leather goods section, which includes the Louis Vuitton, Dior and Celine brands, fell by 6% in the third quarter. Since the pandemic, this is the first time that this activity has experienced a decline. A sector that is nevertheless strategic for the group, since it accounts for almost half of LVMH’s turnover.

Another branch of the group affected by this drop in sales: champagnes, wines and spirits Moët, Hennessy, Cheval Blanc, and even Ruinart, were also impacted, and fell by 8% over the period. A slowdown which is as much due to the drop in Chinese consumption. Other sectors are doing better, such as perfumes and cosmetics, whose sales, notably those of Sephora, continue to increase.

Faced with this drop in sales, which the group hopes will be a trend, LVMH nevertheless has a major advantage: its diversification. Between watches, fashion, leather goods and even hotels, the group is strong enough to face the ups and downs of the market. Recently, the French luxury giant even invested in Formula 1 and bought the Paris FC football club.

Bernard Arnault’s group says it is confident and resilient, in an uncertain economic context, and is banking in particular on the American market which is holding up rather well. The fact remains that its shareholders were more impatient, sanctioning the stock on the Paris Stock Exchange as soon as its results were announced.