Lvmh sees slight luxury gain, but investor confidence remains strained
Louis Vuitton and Dior bucking the trend, LVMH reported a modest 1% organic sales increase to €19.12 billion in the first quarter, yet the French conglomerate’s luxury sector continues to grapple with shifting consumer behavior.
Fashion footfall falters amidst global uncertainty
Despite a positive update compared to last year’s fourth quarter, sales in the core Fashion and leather goods division dipped 2% to €9.25 billion, falling short of analyst expectations. The conflict in the Middle East is proving a significant headwind, impacting demand in a region representing 6% of group sales, with initial figures showing a 30-70% shortfall in March.
Cécile Cabanis, LVMH’s CFO, highlighted resilient performance from brands like Louis Vuitton and Dior, alongside double-digit growth from Loro Piana and Rimowa. However, she acknowledged a concerning trend: the delayed impact of Jonathan Anderson’s arrival at Dior, with initial ready-to-wear collections arriving in stores only in Q1.
Regional divergences: us growth fuels concerns
While the US saw a welcome 3% growth, buoyed by strong Chinese New Year performance, Europe and Japan experienced a 3% decline. The group noted that repatriation of wealth – a key concern among investors – hadn’t materialized, though they anticipate a potential shift as the conflict persists. Notably, local Chinese spending increased significantly in the quarter, alongside a gradual improvement in Chinese tourism.
Across categories, watches and jewelry delivered a robust 7% increase, driven by Tiffany’s and Bvlgari. Perfumes and cosmetics remained flat, with selective retailing – including Sephora – up 4%. Wines and spirits benefited from a strong start to the champagne season in Europe and boosted cognac sales linked to Chinese New Year celebrations.
“We’re navigating a period of considerable volatility,” Cabanis stated, “but we’re seeing a strong response to creativity, new products, and in-store experiences, translating to improved conversion rates – particularly across our flagship brands. The initial reaction to Anderson’s vision is a key indicator of where we’re headed.”
Looking ahead, Kering and Hermès are scheduled to report their first-quarter earnings this week, followed by Moncler, Prada, Burberry, and Richemont. The coming weeks will be crucial in gauging the broader luxury landscape and whether LVMH’s modest gains can truly sustain investor confidence.”n