(Bloomberg) — LVMH shares fell after fashion and leather goods sales fell for the first time since the pandemic, revealing the scale of the decline in demand from once insatiable Chinese consumers.
Organic revenue at the core unit whose brands include Louis Vuitton and Christian dior There was a 5% decline in the third quarter. Analysts had expected a slight increase. This was the worst quarterly performance since the second quarter of 2020 when the world went into lockdown.
LVMH shares fell 7.5% in debut Paris Trading, the stock is down 21% year to date. Wednesday’s decline in luxury stocks wiped the equivalent of about $33 billion from the market values of the sector’s four leading European stocks – lvmhHermes, Richemont and Kering.
“Most of our markets are currently facing economic challenges, including mainland China,” LVMH Chief Financial Officer Jean-Jacques Guinon said during the quarterly presentation. He added, “Consumer confidence in mainland China today is higher than it has been during Covid. “Corresponds to the lowest level till date.” ,
china incentives
BeijingThe recent string of stimulus measures has focused on boosting returns in troubled equity markets and propping up the troubled property sector, but the consumption sector has yet to receive a meaningful boost.
“There has been no improvement in luxury consumption following the recent macro policy pivot,” Citigroup Inc. said in a note based on its check with a luxury mall in eastern China during this month’s Golden Week holiday.
Guioni said it was difficult to assess the potential impact on demand of such measures at the moment, but “it shows that they are taking this issue very seriously,” he said, referring to Chinese officials.
LVMH’s organic sales in the region, which includes China, fell 16% in the quarter at LVMH, more than expected, a disappointment for the group that had been most resilient in the face of cooling demand in the country.
Luisa Chen, a 35-year-old finance professional based in Guangzhou, says that since last year she has barely bought anything that costs more than 5,000 yuan (£703) because her bonus has been cut by 50%. Despite cheering from the stock market’s recent rally, Chen is not ready to resume his old buying habits.
“The results are clearly negative for the industry ahead of the third quarter reporting season and ahead of the key Christmas and Chinese New Year trading periods,” Citigroup analyst Thomas Chauvet wrote in a note.
Run and controlled by Bernard Arnault, one of the world’s richest men, LVMH Moët Hennessy Louis Vuitton SE owns approximately 75 luxury brands spanning fashion, jewellery, hotels and spirits. All of the group’s main units missed analysts’ estimates in the third quarter.