Dive Brief:
- LVMH Moët Hennessy Louis Vuitton revealed a 1% revenue increase in its Q3 earnings report Tuesday, with group totals at 19.96 billion euros, or approximately $21.16 billion for the quarter, up from 19.75 billion for the same period in 2022.
- Its fashion and leather goods division helped boost the quarter growth, and sales in that group rose to 9.75 billion euros for Q3, up 9% year over year. However, that growth represented a slowdown compared to Q1, which saw 18% year over year growth in that division, and Q2, which saw 21% growth in that division year over year.
- In its last earnings report in July, LVMH reported that for the first two quarters of 2023 its operating cash flow was more than halved, and dropped to 1.8 billion euros from 4 billion euros year over year. It said the dip was a result of major real estate investments and operational inventories.
Dive Insight:
LVMH is often seen as a bellwether for the luxury goods market, since it reports earnings earlier than rival firms such as Kering and Richemont. There are some indications that while luxury’s pandemic boom lasted through 2022, it’s now firmly on the wane.
In its earnings presentation, LVMH stated that its outlook for the rest of 2023 included taking advantage of gradual travel rebounds, while “staying vigilant in the context of macro geopolitical uncertainties.”
Global regional revenue mix for the company was largely stagnant year-over-year, with France up 1% and Europe, Asia and Japan unchanged. The U.S. was down 2%, and other market revenues were up 1%.
Total revenue was 62.2 billion euros for the first nine months of 2023, which represented a 9% increase over the first nine months of 2022. However, that increased represented a slowdown from the first half of 2023, which saw 17% growth in both Q1 and Q2.
Fashion brands Louis Vuitton, Christain Dior, Celine, Loewe and Loro Piana all boasted strong performances, and helped drive sales, and the Fashion & Leather Goods business group posted an organic revenue growth of 16% in the first nine months of 2023.
In its press release, the company stated that Louis Vuitton delivered “an excellent performance, once again buoyed by the creativity and quality of its products, and by its strong ties to art and culture.” LVMH also touted the “immense enthusiasm generated in July by the first show of new Men’s Creative Director Pharrell Williams,” and womenswear designer Nicolas Ghesquière’s “boundless creativity continued to captivate audiences.”
“After a stellar performance in recent years, LVMH proves that not even luxury brands are immune to the challenging economic environment,” Alice Price, apparel analyst at GlobalData, said in emailed comments.
Price added that the 1% group revenue growth was “a marked slowdown from the growths of 16.8% and 13.2% recorded in Q1 and Q2 respectively.” In addition, Price said that while LVMH “affirmed its confidence in delivering continued growth for the rest of the financial year, it seems likely that a similar deceleration could be experienced throughout the brand’s final quarter.”
Price said the company’s overall slowdown “can be attributed to the ongoing inflationary pressures in Europe and the US, which is inhibiting spend among aspirational shoppers.”
These consumers, she said, had been “protected by savings accrued during the pandemic and government stimulus payments issued in the US, enabling them to splash out on luxury goods. However, with savings beginning to dwindle, exacerbated by the pressure of increasing costs, these products are gradually becoming out of reach for many.”
