LVMH shares dropped by as much as 7.5% in Paris trading after its fashion and leather goods sales declined for the first time since the Covid-19 pandemic. This drop reflects the growing slump in demand from Chinese consumers, once a major driver of the luxury market. The company reported a 5% decline in organic revenue in the third quarter, marking the worst performance since the lockdowns of 2020.
The slump in luxury stocks wiped out about US$33 billion from the market values of key European stocks, including Hermes, Richemont, and Kering. LVMH's shares have now fallen 21% this year.
LVMH's Chief Financial Officer Jean-Jacques Guiony noted that consumer confidence in mainland China is still near the lows seen during the pandemic, with Beijing's recent stimulus efforts yet to yield a meaningful boost in consumption. Despite hopes for a rebound in the luxury market, Citigroup indicated that there has been "no improvement" in luxury spending following the recent Golden Week holiday in China.
LVMH’s organic sales in China fell by 16%, more than expected, and the company's other divisions also performed below analysts' forecasts. The weak results ahead of the third-quarter reporting season and the upcoming Christmas and Chinese New Year trading periods signal challenges for the luxury sector.
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