Dive Brief:
- LVMH Moët Hennessy Louis Vuitton reported a net profit decline of 14% to 7.3 billion euros, or about $7.9 billion in the first half of 2024, down from 8.5 billion year over year, per a Tuesday earnings release.
- Revenue for the period dropped 1%, with fashion and leather goods falling 2% and watches and jewelry down 5%. The company said it was subject to a substantial “negative impact of exchange rate fluctuations, particularly on Fashion & Leather Goods.” Profit from recurring operations fell 6% in fashion and leather goods and 19% in watches and jewelry.
- The company’s largest declines continued to hit its Wines & Spirits division, which saw a 12% revenue decline and a 26% drop in profit from recurring operations in H1, “reflecting the ongoing normalization of demand that began in 2023,” per the release. Demand for Moët & Chandon champagne and Hennessy cognac has begun to wane since its peak during the pandemic.
Dive Insight:
The luxury sector slowdown in China has impacted earnings at multiple fashion industry giants in recent months. In Richemont’s first quarter, a 19% sales dip in the Asia Pacific region was driven by a 27% drop out of China, while Burberry’s first quarter comparable store sales fell 23% in the overall Asia Pacific region and 21% in China.
In an April Q1 earnings call, Rodolphe Ozun, LVMH’s director of financial communications, said Japan was “one of the fastest growing…destinations for Chinese tourists” and as a result, spending there led to a “negative impact on non-Japan Asia” revenues.
The trend has not abated, and the company said in its Tuesday H1 earnings release that “Japan recorded double-digit revenue growth” but that “the rest of Asia reflected the strong growth in spending by Chinese customers in Europe and Japan.”
“The results for the first half of the year reflect LVMH’s remarkable resilience, backed by the strength of its Maisons and the responsiveness of its teams in a climate of economic and geopolitical uncertainty,” LVMH Chairman and CEO Bernard Arnault said in the release.
Arnault noted LVMH's partnership with the upcoming Paris 2024 Olympic and Paralympic Games. He said the company was “honored to share our creativity, excellent craftsmanship and deep commitment to society to make this event a resounding success and an opportunity for France to shine on the world stage.”
LVMH-owned watch and jewelry brand Chaumet recently unveiled the medals for the Paris 2024 Olympic and Paralympic Games, per the release, and Louis Vuitton designed trunks to house the medals and torches.
“While remaining vigilant in the current context, the Group approaches the second half of the year with confidence, and will count on the agility and talent of its teams to further strengthen its global leadership position in luxury goods in 2024,” Arnault said in the release.
Looking ahead, the company “remains confident” despite the “uncertain geopolitical and economic environment,” per the release. LVMH said it plans to stay focused on “continuously enhancing the desirability of its brands” and “drawing on the exceptional quality of its products and excellence in retail.”
