LVMH struggles with cautious luxury shoppers in uncertain times

Luxury conglomerate LVMH experiences a slower growth as its leather handbags, expensive fashion and cognac are becoming somewhat less popular with cautious American and Chinese consumers in an uncertain economic environment.

Below expectations

The French owner of brands such as Louis Vuitton, Christian Dior and Moët & Chandon reported a sales growth of 9 % in the third quarter: well below the 21 % growth in the previous quarter and also below analysts’ expectations. The leather goods and fashion division performed well below expectations with a 9 % growth, while alcoholic beverage sales also disappointed with a decline of 14 %.

The luxury sector experienced strong growth during and just after the pandemic: quite a few shoppers had savings to spend then, but now demand is normalising again. The uncertain economic situation with high inflation and rising interest rates is prompting consumers to be cautious. In the United States, demand for cognac fell sharply, while in China the economy is recovering slower than hoped. Nevertheless, the group remains confident in the strength of its brands.