Editor’s Note
This article discusses a reported sales decline in LVMH’s core fashion and leather goods division, attributed to a broader slowdown in luxury spending.
The fashion and leather goods division of LVMH Moët Hennessy Louis Vuitton, the world’s largest luxury group, has seen its sales decline due to a global slowdown in luxury consumption.
According to a report by Bloomberg News on the 27th (local time), LVMH stated that sales in its fashion and leather goods division fell by 3% year-on-year in the fourth quarter of last year. This decline was slightly larger than the market’s previous expectation of -2.94%, indicating that the recovery in demand remained very limited even during the year-end shopping season. However, the group’s total revenue for the fourth quarter was 22.7 billion euros, exceeding the market expectation of 22.2 billion euros compiled by financial information company London Stock Exchange Group (LSEG).
Regionally, sales in Europe and Japan fell by 2% and 5% respectively in the fourth quarter, underperforming expectations. In contrast, sales in the United States and some Asian markets, including China, grew by 1% each, exceeding market expectations.
For the full year, operating profit was 17.8 billion euros, a decrease of 9.3% year-on-year, but still slightly better than general market expectations.
However, not all business segments performed poorly. The watches and jewelry business remained relatively resilient, with Bulgari’s fourth-quarter performance exceeding expectations and providing some support for the group’s slight overall revenue growth.
In an uncertain environment, consumers are leaning towards purchasing jewelry products with tangible asset attributes, such as gold necklaces and bracelets, over more trendy handbags. Bloomberg News analysis noted that this trend is consistent with the relatively stable performance of competitors like Cartier, owned by Richemont, in the jewelry business.
The weakness in core businesses like fashion and leather goods stems from an inflection point in the luxury demand that surged post-pandemic. A combination of cost-of-living pressures from high inflation, geopolitical uncertainty, and consumer backlash against years of aggressive price hikes has dampened demand for high-priced handbags and fashion items.
In this context, LVMH stated that it will adopt a more conservative strategy regarding investments and expenditure this year.