Dive Brief:
- LVMH Moët Hennessy Louis Vuitton posted fiscal 2024 revenue of 84.7 billion euros, or about $88.3 billion, representing a 2% year-over-year decline from 2023, according to a Tuesday release. Fourth quarter revenue was flat year over year at 23.9 billion euros.
- Profit from recurring operations fell 14% for the year to 19.6 billion euros, with almost every division experiencing losses except selective retailing, which remained flat. Profits in the wines and spirits division dropped 36%, while perfume and cosmetics profits fell 6%.
- The company’s largest division, fashion and leather goods, posted a revenue decrease of 3% to 41 billion euros for the year and a 10% profit loss. The watches and jewelry division also saw a 3% revenue drop, and posted a 28% profit loss for the period.
Dive Insight:
The luxury sector is projected to see continued sluggishness through at least 2027, but some companies are weathering recent consumer spending shifts better than others.
Earlier this month, Richemont reported record Q3 sales, led by its jewelry division, while Brunello Cucinelli posted year-over-year growth of more than 12% for fiscal 2024. Meanwhile, Burberry is at the beginning of a company-wide transformation designed to restart growth, and Zegna is holding steady as its DTC sales surge.
For LVMH, Tuesday’s earnings reflected “a challenging economic and geopolitical environment,” per the release. The company, which owns fashion houses including Louis Vuitton, Christian Dior, Loewe, Loro Piana, Celine and Givenchy, said the year-over-year comparison basis proved especially difficult after several years of growth following the Covid-19 pandemic.
“In 2024, amid an uncertain environment, LVMH showed strong resilience,” Bernard Arnault, chairman and CEO of LVMH, said in the release. “This capacity to weather the storm in highly turbulent times — already illustrated on many occasions throughout our Group’s history — is yet another testament to the strength and relevance of our strategy.”
By region, revenue was largely flat in 2024, with the exception of Japan, which was up about 18% year over year. Asia, excluding Japan, fell 12.5%.
Departing LVMH CFO Jean-Jacques Guiony, who will become president and CEO of the wines and spirits division effective Feb. 1, said in a Tuesday conference call with analysts that the company’s approach to pricing was part of the reason for the profit decline in 2024.
“We haven’t, or almost haven't, increased prices last year, so we couldn’t offset in gross margin the increase in the price of labor, the cost of labor or input,” he said.
On the same call, Arnault said he wanted to be thoughtful about how increased prices might affect customers moving forward.
“Customers are increasingly aware of the value of the product, beyond the price, if you will,” he said, adding that when prices are raised there needs to be a justification, such as better quality or new materials.
“...[A] number of houses have, unfortunately —again, not all — but some have increased their prices in a somewhat extravagant manner without really giving any justification or having any justification to provide,” Arnault said. “I mean, pushing prices up 15% just doesn’t make sense if there’s no change in the product. And if that happens, then the clients just wonder what’s happening and why they're being taken for a ride. You have to be realistic.”
In the earnings release, Arnault said that LVMH would be “highly vigilant with regard to cost management” and focused on product desirability in 2025.
“Guided by our mission — ‘Passionate about creativity’ — and our core values, the Group will rely on the agility and talent of its teams to set the stage for future success and further extend its leadership in the luxury market,” Arnault said.
