Editor’s Note
LVMH’s latest financial results reveal a shifting landscape within the luxury giant. While its core Fashion & Leather Goods division saw a sales decline, the Watches & Jewelry segment posted a notable rise. This contributed to an overall 9% drop in operating profit for the year, highlighting the challenges and strategic pivots facing the industry leader.
[E-Daily Reporter Kim Gyeo-re] The trend in global luxury consumption appears to be shifting from handbags to high-end jewelry. While luxury brands centered on fashion and leather goods are struggling, luxury jewelry sales are soaring.
Louis Vuitton. (Photo=AFP)
According to Bloomberg on the 27th (local time), the fourth-quarter sales of fashion and leather goods at LVMH Moët Hennessy Louis Vuitton, the world’s largest luxury group owning Louis Vuitton, Christian Dior, and Fendi, decreased by 3% compared to the same period last year. The fashion and leather goods division is a core business, accounting for half of the group’s total revenue. The annual operating profit for the fashion and leather goods division reportedly plummeted by 13% year-on-year.
Due to factors like US mutual tariff policies, sales of cognac brands such as Moët & Chandon were sluggish, leading to a 9% year-on-year decline in wine and spirits business revenue in the fourth quarter of last year.
In contrast, LVMH’s watch and jewelry business sales grew by 8% in the fourth quarter of last year, performing relatively well. Tiffany & Co. and Bulgari recorded stronger-than-expected results in the fourth quarter, contributing to a slight overall sales increase. This is interpreted as a result of consumers, amid economic uncertainty, preferring tangible asset-like jewelry such as gold necklaces and bracelets over trend-sensitive handbags.
Regionally, fourth-quarter sales in Europe and Japan decreased by 2% and 5% respectively, performing worse than expected. Conversely, sales in the United States and some parts of Asia, including China, increased by 1% each, exceeding market expectations.
LVMH’s annual revenue was 80.8 billion euros, a 4% decrease year-on-year. Operating profit was 17.8 billion euros, down 9.3% compared to the previous year.
As luxury jewelry gains popularity over luxury handbags, the fortunes of luxury companies are diverging based on their brand portfolios. Kering, which owns Gucci and Bottega Veneta, is also expected to see a year-on-year decline in its performance last year.
On the other hand, Richemont, the world’s second-largest luxury group owning Cartier, Van Cleef & Arpels, and Piaget, recorded fourth-quarter revenue of 6.399 billion euros, an 11% increase year-on-year. Sales surged worldwide: △Europe 8% △Asia 6% △United States 14% △Japan 17% △Middle East & Africa 20%.