Mimosa Spencer and Dominic Patton
PARIS (Reuters) – LVMH reported a 3% rise in first-quarter sales on Tuesday, signaling a slowdown in price growth as rising prices prompted more shoppers looking to buy its handbags and other luxury items to hold off on spending thousands of dollars.
The slower quarterly sales growth reflects a comparison with the same period in 2023, when sales were boosted by the easing of COVID-19 restrictions in LVMH’s key mainland China market and amid concerns about a prolonged global downturn that brought down shares of luxury companies. last year.
The world’s largest luxury group, owner of Louis Vuitton. Tiffany and Co. (New York Stock Exchange:). and Bulgari said sales for the quarter ended March rose 3% year-on-year organically to 20.69 billion euros ($22 billion), in line with analysts’ expectations.
The group’s sales were reported to be down 2%, mainly due to currency fluctuations.
LVMH, Europe’s second-largest listed company at nearly 400 billion euros, is the first luxury goods maker to report quarterly profit, setting the tone amid growing concerns about demand in China, the world’s No. 2 economy.
Gucci owner Kering (EPA:) issued a surprise warning last month that first-quarter sales would fall 10%, with the sharpest decline coming from Asia, raising uncertainty about the sector’s prospects.
LVMH said its sales in Asia excluding Japan fell 6%, while Europe and the United States grew 2%.
The luxury industry is adjusting to slowing demand after a period of booming sales in the wake of the pandemic, which saw shoppers emerge from lockdown with extra savings and a pent-up desire to treat themselves.
Growth in the luxury sector is expected to slow to single digits this year, down from nearly 9% last year and double digits in the previous two years, Barclays forecasts.
Traveling Chinese shoppers are expected to drive growth, although investors are increasingly concerned about the pace of recovery in China itself, where falling property prices and high youth unemployment have dampened demand for luxury fashion and leather goods.
However, LVMH Chief Financial Officer Jean-Jacques Guiony told reporters he was “quite happy” with Chinese demand.
Purchases of Louis Vuitton products by Chinese shoppers worldwide are up about 10%, with a growing share coming from outside the mainland as travel resumes, especially in Japan and to some extent in Europe, he said.
Sales at LVMH’s fashion and leather goods division, which includes Louis Vuitton and Dior, rose 2%, missing expectations.
Sales at the division, which sells small Lady Dior bags priced at €5,400 and roomy Louis Vuitton Speedy bags priced at €10,000, rose 9% in the previous quarter compared with the same period last year.
LVMH, the spirits, jewelry, cosmetics and fashion conglomerate that is considered a leader in the luxury goods industry, does not provide details about its brands.
The company’s shares have been volatile since the luxury downturn began, falling 11% over the past year.
Shares in Kering, which is revamping Gucci, and Burberry fell 40% and 55% respectively. Meanwhile, Hermes has outperformed rivals as the ultra-wealthy continue to splash out on pricey Birkin bags, with shares up 16% for the year.