LVMH said third-quarter organic sales rose 1% to €18.5 billion ($20.7 billion), missing the Visible Alpha consensus of 1.3%. The fashion and leather goods division — nearly half of group revenue and its main profit engine — saw organic sales fall 5%, against expectations for a 1.8% decline. Divisional revenue came to €8.25 billion, down from €8.5 billion a year earlier, according to Investing.com. The unit had only just returned to growth in the second quarter, ending seven consecutive quarters of declines, so the swing back into negative territory undercut hopes that the worst was over.
Reported revenue of €18.5 billion was slightly ahead of the €18.46 billion consensus, thanks to stronger showings elsewhere. Selective retailing was the best performer, growing 8% organically as Sephora gained market share in several countries, leaned on exclusive launches including Rhode, and entered Belgium and Croatia. Watches and jewelry rose 6%, with Tiffany strengthening its HardWear, Knot and Sixteen Stone lines and Bvlgari's new Eclettica high-jewelry line generating record revenue. Wines and spirits were up 6% and perfumes and cosmetics were roughly flat at 1%. For the first nine months, group revenue reached €57.1 billion, down 2% as reported and up 2% organically.
"In the third quarter specifically, Asia was penalised by a sharp macro-led deterioration in Chinese consumer sentiment, with a tangible impact on discretionary expenses," CFO Cécile Cabanis told analysts. She said the "feel-good" factor among Chinese consumers deteriorated at the very start of the quarter, compounding a Middle East situation that remains a headwind. "We hope these situations will subside, but in the meantime, self-help is a priority for performance to improve," she added, pointing to brand-level initiatives.
Cabanas said Louis Vuitton was hit by a one-off logistic and transportation disruption that cost "a bit more than a point of growth," suggesting part of the brand's weakness was temporary rather than structural. The label has also faced backlash in China after winning a trademark case against Shenzhen-based tea chain Molly Tea, whose logo resembled the floral motif on Vuitton's signature monogram handbags; the dispute drew criticism on social media and in state media. JL Warren Capital estimated Vuitton's China sales fell about 30% in July and 20% to 25% in August, narrowing to roughly 13% in September.
By region, sales in Asia excluding Japan were down 5%, while the United States rose 5%, Europe 4% and Japan 6%. LVMH said the US, Europe and Japan saw "good growth" in a quarter shaped by a less buoyant environment in China.
LVMH's US-listed shares fell close to 3% after the trading update. The stock is down roughly 40% this year, and the group has lost its place as the largest company on Paris's CAC 40 by market capitalisation to L'Oréal. Bank of America said the results "will likely still be a negative catalyst for the sector overall," while RBC's Piral Dadhania expects "modest pressure" on LVMH and its peers. Goldman Sachs analyst Erwan Rambourg tied part of China's sequential deceleration to a new tax on foreign assets and a wave of store closures, saying "the mood music is unsupportive of luxury" — though he expects a re-acceleration into the fourth quarter and next year on better pricing architecture and product propositions.
As the first major luxury player to report, LVMH is setting the tone for a US$350 billion industry mired in a three-year slowdown. Hermès and Kering are due to publish third-quarter sales on Oct. 22, and those numbers will show whether the recovery can hold heading into the year-end shopping season.