LVMH Sales Decline Sparks Luxury Sector Concerns

LVMH's stock price fell by 8% after the company reported a 3% year-on-year decrease in first-quarter sales, which was below analyst expectations. This downturn has raised concerns across the luxury sector, affecting other major players such as Kering, Burberry, and Richemont, which also saw their share values decline. During this period, Hermès briefly exceeded LVMH in market capitalization.

Division Performance

The wines and spirits division experienced the most significant revenue decline, with a 9% drop attributed to decreased demand in the U.S. and China. The fashion and leather goods division, which accounted for 78% of LVMH's 2024 profits, saw a 5% decrease in sales.

Geographical Performance

Europe experienced a 2% growth in sales. However, Asia excluding Japan saw an 11% decrease, the U.S. a 3% decrease, and Japan a 1% decrease.

Factors Influencing the Decline

Analysts have expressed concerns about the luxury sector's short-term visibility, particularly regarding trade tensions and potential tariffs. The possible impact of tariffs on input costs and consumer demand is a key area of focus. LVMH CFO Cecile Cabanis stated that there were no significant trend changes in the first quarter but acknowledged that economic uncertainties could affect aspirational consumers, especially in the wines and spirits and beauty categories.