LVMH: luxury industry barometer shows volatile climate

Even though LVMH has recorded moderate growth in the fourth quarter of 2024, the full-year figures show that the company (and with it, the sector) still has a mountain to climb. CEO Bernard Arnault hopes for improvement in the United States.

Modest growth and dwindling profits

LVMH’s fourth quarter sales climbed 1 % (like-for-like) to 23.9 billion euros: that was better than expected, as analysts had expected a contraction of 1.25 %. Full year growth was also 1 %, to 84.7 billion euros, but at constant exchange rates there would have been a sales drop of 2 %.

Operating profit fell 14 % to 19.6 billion euros, while net profit fell 17 % to 12.3 billion euros. Sales in the fashion and leather goods division, which accounts for half of the group’s turnover, fell by 1 %. The watches and jewellery division recorded a 2 % sales drop, while the wines and spirits division recorded the biggest fall: down 11 %.

Retail was a notable bright spot: the division comprising Sephora and Le Bon Marché recorded organic sales growth of 6 %. The Sephora cosmetics chain even recorded “double-digit growth”, both in terms of sales and profits, although the group does not specify exact figures.

Worries about China

The quarterly figures suggest that the market is stabilising, but the annual results underline that the sector remains under pressure. In particular, the weakness of the Chinese market remains a cause for concern. Sales of luxury goods in China fell by 20 % in 2024, the biggest drop since 2011.

On the other hand, Arnault remains optimistic about growth opportunities in the US, where the economy is showing resilience and tax breaks are driving expansion. The presence of the Arnault family at Donald Trump’s inauguration underlines the strategic importance of the US market, which is becoming increasingly vital as growth in China falters.

For 2025, LVMH remains cautiously positive, despite what Arnault calls “a more delicate conjuncture”. He issued no concrete forecasts, but positive signs in the fourth quarter may point to a possible recovery. Meanwhile, the group is also cleaning up its brand portfolio: designer Stella McCartney is buying back her minority stake, as the group announced yesterday.