Editor’s Note
LVMH’s 2024 results highlight a pivotal moment for the luxury sector. While revenue growth in a challenging climate demonstrates resilient brand power, the significant drop in operating profit signals a new phase of market normalization and pressure on margins. This bellwether report suggests the industry’s post-pandemic surge has definitively cooled.
On January 28, French luxury conglomerate LVMH Moët Hennessy Louis Vuitton released its full-year 2024 financial report. The report stated that despite a challenging economic and geopolitical environment and the high base effect from exceptionally strong post-pandemic growth in recent years, the group’s sales revenue grew organically by 1% to €84.7 billion, exceeding expectations. However, recurring operating profit fell organically by 14% to €19.6 billion, marking its first decline since 2020, primarily due to slowing growth, rising costs, and minimal product price increases, which pressured profit margins.
Following the earnings release, LVMH’s share price on the Paris stock exchange reached €709 per share, having risen 12% since the start of the year. This pushed its market capitalization to €356.7 billion, surpassing Danish pharmaceutical giant Novo Nordisk A/S’s €344.5 billion, making LVMH once again Europe’s most valuable listed company. HSBC analysts recently upgraded LVMH’s stock rating from “hold” to “buy,” citing expectations of 4% organic sales growth this year. Analysts noted that LVMH’s investment value hinges on a luxury sector recovery and a rebound in the Chinese market.
2024 was a turbulent year for the luxury and fashion industry, with 11 out of 18 major companies recording negative returns, erasing tens of billions of euros in market value, reflecting cautious consumer spending and global economic uncertainty. Tapestry’s stock price surged 71% against the trend, benefiting from rumors of a potential merger with Capri Holdings and strong performance from its flagship brand Coach. Ralph Lauren, Prada, and Ferrari rose 58%, 37%, and 34% respectively, showing support from consumer demand and successful strategies. Capri Holdings performed the worst, with its stock price plummeting 58%, exacerbated by challenges in divesting key brands like Versace and Jimmy Choo. Ferragamo and Kering saw their shares fall 44% and 39% respectively.
By the end of 2024, the luxury sector saw a degree of recovery. A Goldman Sachs-tracked index rose 13%, outperforming the broader market. This recovery benefited from optimism regarding growth expectations in China and the US. Last month, Italian luxury company Brunello Cucinelli and Swiss luxury giant Richemont released strong quarterly and annual financial reports, restoring optimism in the capital markets for the luxury industry. Brunello Cucinelli’s full-year revenue grew 12.2% year-on-year to €1.2784 billion, with Q4 revenue up 11.6% to €358 million, a record high for the quarter. Richemont’s sales last quarter grew 10% year-on-year to €6.2 billion, a significant improvement over the previous two quarters. Its stock price rose nearly 17% over two days following the report, with a year-to-date increase of 23%, pushing its market capitalization above 100 billion Swiss francs for the first time.
LVMH owns over 70 brands, with Fashion & Leather Goods being its core business. This division’s organic sales fell 1% for the full year to €41 billion, accounting for nearly half of group sales. The division welcomed two new creative directors at the end of last year: Michael Rider for Celine (formerly Creative Director at Polo Ralph Lauren) and Sarah Burton for Givenchy (formerly Creative Director at Alexander McQueen, owned by Kering). The Wines & Spirits division saw the largest decline, with organic sales falling 8% to €5.9 billion. Conversely, the Perfumes & Cosmetics division posted the largest increase, with organic growth of 4% to €8.4 billion. The Watches & Jewelry division revenue fell 2% to €10.6 billion, while the Selective Retailing division (including Sephora and DFS) revenue rose 6% to €18.3 billion.
By region, Europe and the Americas achieved organic growth of 3% and 2% respectively for the full year, each recording revenue of €21.2 billion. Japan saw revenue growth of 26%, while the rest of Asia declined by 11%. The group attributed this to “reflecting strong growth in spending by Chinese consumers in Europe and Japan.” Nevertheless, Asia (excluding Japan) remained the largest contributor to global sales (28%), with revenue of €23.7 billion.
Chairman and CEO Bernard Arnault presided over the earnings presentation, conveying confidence to the market:
He also stated that LVMH and its brands’ collaboration with the Paris 2024 Olympic and Paralympic Games was “a major collective achievement for the group in 2024.” CFO Jean-Jacques Guiony noted that the Chinese market showed improvement compared to previous quarters:
LVMH plans to strengthen its digital infrastructure and customer experience this year, expecting 25% of personal luxury goods to be sold online. The company also aims to target younger consumers and expand global partnerships, including its collaboration with Formula 1.
A core move for the LV brand in 2025 is renewing its collaboration with Japanese artist Takashi Murakami to celebrate their 20-year partnership. The collaboration is divided into two chapters, with the first launching globally on January 1, 2025, and the second set to debut in March 2025, featuring designs inspired by Murakami’s classic cherry blossom motifs.
LV and Murakami also launched a pop-up space on Julu Road in Shanghai from January 1-7, featuring a mini cinema and coffee garden focused on experiential engagement. LV’s current President and CEO Pietro Beccari stated in an interview:
Dior, often criticized by professionals as “slightly dated and repetitive,” received praise for its creativity from Bernard Arnault during the post-earnings conference. Dior earlier announced Chinese tennis star Zheng Qinwen as a global ambassador. The 22-year-old, currently ranked world No. 5 by the Women’s Tennis Association, has garnered global attention. Dior will present its 2025 Pre-Fall collection on April 15 at the Toji Temple Garden in Kyoto, Japan, celebrating the brand’s close ties with the country.