Editor’s Note
This article discusses a reported slowdown in luxury goods sales for LVMH in key markets, reflecting broader consumer trends. While specific figures are noted, the overall financial performance for the period exceeded revenue expectations.
Sales of LVMH’s fashion and leather goods have declined due to a global slowdown in luxury consumption.
According to Bloomberg on the 27th (local time), LVMH announced that its fashion and leather goods sales in the fourth quarter of last year decreased by 3% compared to the previous year. This slightly missed market expectations (-2.94%), indicating limited demand recovery even during the year-end shopping season. However, the fourth-quarter revenue of 22.7 billion euros exceeded the market expectation of 22.2 billion euros compiled by financial information firm LSEG.
Regionally, fourth-quarter sales in Europe and Japan decreased by 2% and 5% respectively, performing worse than expected. In contrast, sales in the United States and parts of Asia, including China, increased by 1% each, exceeding market expectations.
Operating profit for the year was 17.8 billion euros, a 9.3% decrease year-on-year, but it was better than market expectations.
However, not all sectors performed poorly. The watches and jewelry business performed relatively well. In particular, Bulgari recorded stronger-than-expected results in the fourth quarter, contributing to a slight overall revenue increase.
This is interpreted as a result of consumers in an uncertain environment preferring jewelry like gold necklaces and bracelets, which have tangible asset characteristics, over trendy handbags. Bloomberg analyzed that this is in line with competitors like Cartier, owned by Richemont, posting relatively solid results in the jewelry sector.
The weakness in core businesses like fashion and leather goods stems from the post-pandemic surge in luxury demand tapering off. High inflation burdening living costs, geopolitical uncertainty, and consumer backlash against years of aggressive price hikes have combined to dampen demand for expensive bags and fashion items.
Accordingly, LVMH has stated it will take a more conservative approach to investment and cost execution this year.