LVMH’s subdued sales temper hopes for a rapid luxury rebound

LVMH’s sales of fashion and leather goods declined in the fourth quarter, casting doubt on the prospects of a quick recovery in luxury demand.

Sales at the key unit, which includes the Louis Vuitton and Christian Dior brands, slipped 1 per cent on an organic basis as wealthy holiday shoppers remained cautious. Overall revenue at LVMH increased only 1 per cent.

Both figures were slightly better than estimates but disappointed investors after an upbeat report from rival Richemont earlier in January. The Swiss company reported stronger-than-expected quarterly sales on purchases of its Cartier and Van Cleef & Arpels jewellery in the US, sparking optimism the luxury market was emerging from the doldrums.

LVMH shares fell as much as 4.5 per cent in Paris early on Jan 29. The stock had rallied more than 30 per cent from its low of November 2024.

The results in fashion and leather goods failed “to stand up to the upgraded expectations on the back of the recent Richemont major beat”, said Bernstein analyst Luca Solca in a note.

LVMH’s update raised concerns that the industry’s recovery from 2024’s slump – caused in part by

Chinese shoppers reining in high-end purchases

after years of splashing out – may be slow and uneven.

Sales in the region that includes China dropped 10 per cent in the fourth quarter, the only geographic area that did not show growth.   

“What I expect is to see a gradual recovery,” LVMH chief executive Bernard Arnault said of China during a presentation on Jan 28. “The environment was severely impacted by Covid-19, then there was a strong recovery, followed by another crisis – the real estate crisis – so it’s going to take some time.” 

Overall, the situation globally was better in the period, but the improving trend still needs to be confirmed, chief financial officer Jean-Jacques Guiony said. 

Profit at LVMH disappointed, even as the company lowered its overall marketing costs by 5 per cent in 2024. Recurring operating income dropped 14 per cent in 2024 to €19.6 billion (S$27.6 billion), missing estimates. One-time costs had an impact, including charges related to the Paris Olympic Games, Mr Guiony said.

Still, there were signs of resilience at the luxury group. Sales at the watches and jewellery unit, which includes Tiffany and Bulgari, unexpectedly rose in the fourth quarter, more evidence that wealthy shoppers are favouring so-called hard luxury items, rather than the soft luxury of handbags and evening wear. Tiffany sales rose 9 per cent in the period.

Mr Arnault struck an upbeat tone at the presentation. He said 2025 has started relatively well, with Louis Vuitton posting double-digit growth so far.

Citigroup analyst Thomas Chauvet said that strong performance in early 2025 “should be taken carefully”, since Louis Vuitton recently launched a high-profile campaign with Japanese artist Takashi Murakami featuring movie star Zendaya.

Mr Arnault also said he is confident that struggling brand Dior will make progress in 2025, and predicted a “booming” US market, a country he visited last week for President Donald Trump’s inauguration.

The wine and spirits business, which has been in a slump following a pandemic-era surge, could recover in the next two years, he said. A sale of the Moet Hennessy drinks unit is not on the agenda, Mr Arnault added. The division gets a new management team starting next week, led by Mr Guiony and Mr Arnault’s son Alexandre. BLOOMBERG