French luxury giant LVMH reported a 3% fall in third-quarter sales, undershooting estimates in its first decline in quarterly sales since the pandemic as demand in China and Japan weakened, likely exacerbating investor worries.
The world's biggest luxury group generated €19.08 billion ($20.8 billion) in revenue for the three months ending in September, a 3% fall on an organic basis, stripping out the effect of currencies, acquisitions and divestitures.
The figure missed a consensus estimate of 2% organic growth cited by Barclays.
The group "badly" undershot expectations, with "misses across the board," said Luca Solca, an analyst at Bernstein.
Demand In China
The sales report, the first of the quarter from the large luxury companies, comes after a rollercoaster for luxury stocks in recent weeks, as stimulus measures in China briefly fuelled hopes of a recovery.
Chinese consumer confidence has slumped to the all-time lows of the COVID-19 era, LVMH chief financial officer Jean-Jacques Guiony said on an analyst call, though he added that the company still believed in the future of the market.
The LVMH sales, and a bigger decline at smaller Italian firm Ferragamo, will do little to steady the market.
"LVMH being the sector proxy for many, this print will inevitably cause more short-term volatility," said Flavio Cereda, co-manager of GAM's Luxury Brands investment strategy, a fund that owns shares in luxury stocks.
The company's wine and spirits division saw an 8% revenue decline in the first nine months of 2024. Champagne sales declined in this period but remained significantly higher than in 2019, while Hennessy cognac was held back by weak local demand in the Chinese market. In the US, Hennessy saw a return to growth in the second quarter.
Elsewhere, the fashion and leather goods division, home to Louis Vuitton and Dior labels, reported a sales decline of 5%, well below consensus expectations for 4% growth, and the first fall for the business since 2020.
Additional reporting by ESM.
