Luxury goods in the doldrums as Asia hits LVMH hard

Sales at LVMH, the world’s largest luxury goods group, fell in the last quarter as global demand for luxury goods is flagging. Louis Vuitton’s parent company is experiencing particular difficulties in China and Japan.

No more bargains

The Japanese yen is recovering after a historic fall, which is having an immediate negative impact on LVMH. The weak yen meant that the Chinese customers flocked to Japan for bargains, but now that source of revenue is drying up. Moreover, demand in China itself has weakened even further. Clothes and accessories are selling more slowly, and even Hennessy cognac is struggling to find its way. To make matters for the latter even worse, the Chinese government is to impose import duties of no less than 35 % on French cognac.

Third-quarter sales went down 4.4 % to 19.08 billion euros, staying under the 19.94 billion euros forecast by analysts. The fashion and leather goods division, traditionally the group’s stronghold, was hit with an organic sales drop of 5 % to 9.15 billion euros, whereas the division with brands such as Louis Vuitton and Dior had still grown 1 % in the first half of the year. The wines and spirits division even fell by 7 %, but this was already better than in the first half of the year.

The results came in despite LVMH’s high visibility as a sponsor of the 2024 Paris Olympics. Did the investment, which CEO Bernard Arnault had reluctantly been persuaded to make by his children, fail to pay off? According to the group itself, the brands did gain market share, however.