LVMH Sales Decline Raises Concerns Amid Economic Uncertainty

Shares of LVMH experienced an 8% decline, leading to a temporary loss of its status as the world’s largest luxury firm to Hermès, following an unexpected 3% drop in first-quarter sales compared to the previous year. This decline fell short of even the most conservative expectations set by analysts, with notable struggles in the wines and spirits sector, which saw a significant 9% decrease in revenue. The luxury conglomerate’s key fashion and leather goods division, responsible for 78% of its profits in 2024, also faced a 5% sales dip.
Overall, LVMH’s market capitalization reached 244 billion euros ($276.4 billion), slightly lower than Hermès’ 244.3 billion euros. European sales grew by 2%, while the Asia region excluding Japan experienced an 11% decline, and U.S. sales dropped by 3%. Analysts have expressed concerns over the luxury sector’s outlook, indicating challenges due to economic uncertainties and trade tensions, particularly the impact of tariffs on consumer demand and input costs.
In the face of these challenges, LVMH’s Chief Financial Officer acknowledged the vulnerability of aspirational clientele during economic downturns but noted that there had not been a major change in sales trends in recent months. The company is considering pricing adjustments in response to inflation and currency fluctuations, while maintaining that luxury brands might be better positioned to manage the effects of tariffs compared to other retailers.

Source: CNBC