Sales at LVMH, the world’s largest luxury goods group, fell in the last quarter. Global demand for luxury goods is flagging, and 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 weakness of the yen meant that the Chinese in particular flocked to Japan for bargains, but now that too is drying up. Indeed, demand in China itself has weakened further. Not only are clothes and accessories selling more slowly, even Hennessy cognac is struggling to find its way. Without even factoring in the import duties of no less than 35% that the Chinese government will soon be imposing on French cognac.
Third-quarter sales came to 19.08 billion euros, down 4.4% on the previous year and less than the 19.94 billion euros expected by analysts. The fashion and leather goods division, traditionally the group’s stronghold, was particularly hard hit: organic sales fell by 5% to 9.15 billion euros, whereas the division with brands such as Louis Vuitton and Dior had still grown by 1% in the first half of the year. The wines and spirits division even fell by 7%, but this was already less than in the first half.
Yet LVMH was highly visible as a sponsor of the Paris Olympics this summer. Did the investment, which CEO Bernard Arnault had reluctantly been persuaded to make by his children, fail to pay off? According to the group, the brands did gain market share.