The French luxury giant, which published disappointing results on Tuesday evening, continues to suffer from an unstable geopolitical climate and a drop in Chinese consumption of certain luxury products.
Global French luxury goods giant LVMH, which includes some of the world's most prestigious fashion, leather goods, fine jewelry and spirits houses, has just announced a negative -14% jump in first-half net income to 7.26 billion euros. Total sales for the Arnault family group fell by -1% to 41.677 billion euros.
The financial world was awaiting these results to take the pulse of the international luxury goods market, penalized by several factors including the slowdown in China and uncertainties linked to an unstable and potentially explosive geopolitical situation. These factors did not spare the world's number one luxury brand, which fell short of expectations, as analysts from Factset and Bloomberg had forecast slightly higher figures: 42.3 and 42.13 billion respectively.
One of the divisions most affected by these mixed results was Fashion & Leather Goods. The division, of vital importance to LVMH, suffered a -2% decline in overall sales. Although reported earnings came to 20.77 billion euros, LVMH nevertheless pointed out that the division's operating margin “remains at historically high levels” (38.8%).
Weak Chinese demand for several luxury products contributed to a drop in sales for certain divisions. These include Watches and Fine Jewelry, with sales down 5% to 5.15 billion euros, and the Wines and Spirits division. After the years of post-Covid euphoria, sales are down to 2.8 billion, suffering a -12% fall. China's consumption of champagne, and above all cognac, is falling. In this market, which is crucial for LVMH, there is a new trend towards sobriety and caution in the consumption of high-end products.
The perfumes and cosmetics division, on the other hand, posted much better results, surpassing 4 billion euros and climbing +3%. Sales are led by perfumes and make-up products: Sephora is the driving force behind selective retailing sales, with the large cosmetics chain posting a +3% increase to 8.6 billion euros. While airport duty-free sales are even less successful than in pre-pandemic years.
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