LVMH Sales Slowdown Clouds Luxury Sector’s Fragile Recovery

what happened

Newsmetry API reports that French luxury group LVMH generated 18.50 billion euros ($20.72 billion) in sales from July through September. Organic growth reached only 1% from a year earlier, down from the 3% increase recorded in the second quarter. The result matched expectations from analysts polled by Visible Alpha.

The company’s core fashion and leather-goods division, which includes Louis Vuitton and Dior, posted a 5% year-on-year sales decline to 8.245 billion euros, missing analysts’ forecasts. The unit had returned to growth in the second quarter, but its renewed contraction points to a difficult recovery. LVMH cited a “less buoyant” Chinese market as a drag on fashion performance.

The weaker showing from the sector’s bellwether adds to concerns about the durability of luxury’s recovery. European luxury shares have fallen more than 20% on average this year, according to the text. A fading multiyear Chinese demand boom, pressure on Western middle-class shoppers and broader macroeconomic strains continue to weigh on spending.

There were brighter spots: the watches and jewelry division, which includes Tiffany and Bulgari, increased sales by 6% year on year, while travel retail grew 8%. Gucci owner Kering, Hermes and Prada are scheduled to report their latest sales figures next week.

why it matters

LVMH’s figures matter to markets because the group is a bellwether for global luxury demand. Investors will compare upcoming reports from Kering, Hermes and Prada to gauge whether the sector’s recovery is broadening or losing momentum.

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