Editor’s Note
This article discusses LVMH’s first quarterly revenue decline since the pandemic, reporting a 4.4% drop to €19 billion in Q3. It also notes the potential impact of a planned French tax increase.
LVMH recorded its first revenue decline since the pandemic, with third-quarter revenue falling 4.4% to 19 billion euros (approximately 28.1897 trillion won). This is expected to be compounded by a significant blow from the French government’s tax increase policy.
LVMH announced a decline in third-quarter revenue. For the first nine months of this year, LVMH’s revenue totaled 60.75 billion euros (approximately 90.1238 trillion won), a 2% decrease. Revenue from the fashion and leather goods division, which includes Louis Vuitton and Dior and accounts for nearly half of profits, fell by 5%.
This figure fell short of the 1% growth anticipated by analysts at financial investment data firm Visible Alpha, marking the first revenue decline since stores were forced to close during the COVID-19 pandemic in 2020. Revenue from both the watches and jewelry division and the wines and spirits division also declined in the third quarter.
LVMH attributed the weak third-quarter performance to “mainly low growth in Japan, fundamentally due to the strength of the yen.” While sales growth in Japan maintained double digits, it showed a declining trend compared to the sharp growth in the first half. In Asia excluding Japan, third-quarter revenue fell by 16%, and revenue in the United States, the largest luxury market, remained flat.
Chief Financial Officer Jean-Jacques Guiony lamented to analysts. Chinese consumers, who have significantly contributed to luxury market growth over the past decade, are now cutting back on spending due to concerns about their country’s gloomy economic outlook and fragile housing market.
commented Thomas Chauvet, an analyst at Citi Group, regarding LVMH’s third-quarter performance, adding that he expects LVMH’s annual group revenue estimate to fall by 3-5%.
LVMH is actively defending the group’s position through measures such as selling Off-White and hiring new designers for Celine, Fendi, and Givenchy. To cut costs, most new store investments are expected to be limited to the jewelry division, such as Tiffany & Co.
Meanwhile, following the French government’s announcement of plans to increase taxes on large corporations to strengthen public finances, LVMH is expected to face an additional tax burden of up to 800 million euros (approximately 1.1867 trillion won) next year.