Shares fall after LVMH sales disappoint

(Sharecast News) - Shares in Europe's luxury goods firms came under pressure on Wednesday, after third-quarter numbers from France's LVMH missed expectations.

The owner of Louis Vuitton, Veuve Clicquot and Tiffany & Co, among many other high-end brands, said group revenues fell 3% on an organic basis in the three months to September end, to €19.08bn .

Analysts had been looking for a 2% improvement.

Sales were down 5% at its core fashion and goods unit, against expectations for a rise of around 4%. The last time to division recorded a fall in sales was during the pandemic.

Spending in China - a core market for the luxury goods sector - has taken a hit, as the country grapples with slowing economic growth and a crisis-hit property market.

Demand in Japan also softened during the quarter, LVMH noted, hit by a stronger yen.

In the first nine months of the year, reported revenues slid 2% at €60.75bn, dragged lower by an 11% slump in its wine and spirits division, a 5% fall in watches and jewellery and 3% decline in fashion and leather goods.

LVMH said that despite an "uncertain" economic and geopolitical environment, it remained "confident" and would continue to focus on enhancing the desirability of its brands.

However, the update - released after markets closed on Tuesday - unnerved investors, and by 0945 BST on Wednesday, the stock was trading 4% lower, having earlier lost as much as 7%.

It also weighed on other luxury stocks, with London-listed Burberry Group falling 2% to 630p, and French rivals Kering - owner of Gucci - and Hermes International off 3% and 2% respectively.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: "After several years of eye-watering post-pandemic growth for LVMH, sales have slipped into negative territory."

However, he added: "This is what sets LVMH apart from many of its peers: its vast stable of blockbuster luxury brands means it is more diversified and often better able to ride out some of the ups and downs in the market.

"And while it's still too early to tell, it's hoped that China's ongoing stimulus blitz could mark a turning point for companies like LVMH."

LVMH is controlled by French billionaire Bernard Arnault, whose family holds a 48% stake.