PARIS, Oct 12 (Reuters) – Luxury bellwether LVMH on Monday reported worse-than-expected third-quarter organic sales growth as demand for its fashion and leather brands, including Louis Vuitton and Dior deteriorated.
The trading update from LVMH – the world’s largest luxury group and the first major firm to report third-quarter results – looked likely to further unsettle investors amid fears that the $350 billion luxury sector, mired in a three-year slowdown, will struggle to regain its former momentum.
LVMH said in a statement that business activity in China was less “buoyant”, while the United States, Europe and Japan still saw “good growth”.
Organic sales, which strip out currency swings, rose 1% year-on-year to €18.5 billion ($20.65 billion), compared with an 1.3% increase expected by analysts in a Visible Alpha consensus. The fashion and leather goods division, which generates nearly half of group revenue, posted a 5% fall in organic sales, against an expected 1.8% decline.
Europe’s leading luxury groups have lost around €330 billion in market value since the start of the year, with LVMH alone shedding about 40% of its value.
China’s tax crackdown on wealthy individuals has become the latest headache for luxury brands, already grappling with the fallout from the Iran war and signs of slowing consumer spending in the United States.
LVMH’s fashion and leather division is dominated by Louis Vuitton, by far the group’s biggest brand. The label has faced a backlash in China over a copyright dispute with tea chain Molly Tea, which used a logo resembling the floral motif used on Louis Vuitton’s signature monogram handbags. The dispute drew criticism on social media.
($1 = 0.8960 euros)
(reporting by Tassilo Hummel, editing by Dominique Patton)
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