LVMH's sales slowed in the first quarter as rising prices prompted more shoppers who aspire to own its luxury labels to hold back on splashing out thousands of dollars on handbags and other accessories.
Slower sales growth of 3% reflected comparisons with the same quarter in 2023, when sales were boosted by the lifting of COVID-19 curbs in LVMH's key market of mainland China and comes amid worries about a prolonged global slowdown which has knocked shares in luxury companies over the past year.
The world's largest luxury group, owner of Louis Vuitton, Tiffany & Co. and Bulgari, said that sales for the quarter ending in March rose 3% on an organic basis to €20.69 billion ($22 billion), matching analyst expectations.
On a reported basis, sales at the group were down 2%, largely due to currency effects.
LVMH, which is Europe's second-largest listed company and worth nearly €400 billion, is the first luxury goods maker to report quarterly earnings, setting the tone as worries grow about demand in China, the world's No. 2 economy.
LVMH said its Asia sales, excluding Japan, were down 6%, with growth of 2% in both Europe and the United States.
Results Were 'Broadly OK'
The results were 'broadly OK' against the most difficult comparison period of the year, said analysts at Bernstein, and would likely support LVMH's stock.
Higher growth rates should start to kick-in in the second quarter, they added.
The luxury industry is adjusting to slower demand after a period of stellar sales growth following the pandemic, when shoppers emerged from lockdowns with extra savings and a pent-up desire to treat themselves.
Barclays predicts growth rates will slow to mid single digits this year, down from nearly 9% in 2023 and double digits the previous two years.
Wine And Spirits
The company's wine and spirits business reported a 16% decline in revenue on a reported basis (down 12% on an organic basis) to €1.4 billion in the first quarter.
The performance of Hennessy cognac was hampered by a cautious attitude among retailers, which limited their orders in an environment of uncertainty in the United States.
Moreover, champagne sales were down, reflecting the normalisation of post-COVID-19 demand.
Among Provence rosé wines, the Minuty estate was included in the first-quarter accounts for the first time, LVMH added.
News by Reuters, additional reporting by ESM.
