On October 16, 2024, LVMH, the world's largest luxury fashion group, reported disappointing sales results, leading to a sharp decline in its shares and those of its competitors. The company's fashion and leather goods division, which includes renowned brands like Louis Vuitton and Dior, experienced a 5% drop in sales, significantly below the anticipated 4% growth. This marked the first sales decline for the division since 2020.
Overall, LVMH reported a 3% decrease in organic revenue, falling short of the expected 2% growth. Shares plummeted as much as 7.5% to a two-year low before recovering slightly by the afternoon. Other luxury brands, such as L'Oreal and Hermes, also saw declines of 1.59% and 0.53%, respectively.
Bernard Arnault, the founder and CEO of LVMH, lost $7.3 billion in net worth as a result of the stock drop, bringing his total worth to $166.7 billion, ranking him as the fifth-richest person globally. The Asian market, particularly China, was identified as LVMH's weakest performer, with a reported 16% drop in organic sales in the region, marking the third consecutive quarter of negative performance.
Chinese consumers are reportedly reducing high-end purchases due to a struggling property market and an uncertain job outlook. Despite a recent stimulus package introduced by Chinese authorities aimed at boosting consumer spending, confidence remains low, with current sentiment aligning with the all-time lows experienced during the COVID-19 pandemic.
Additionally, former U.S. President Donald Trump has announced intentions to implement high tariffs on luxury goods, which could further impact LVMH's cognac brand, Hennessy, in the Chinese market.