LVMH Sales Miss Forecasts Amid Luxury Industry Slowdown -- 2nd Update

   By Mauro Orru 
 

LVMH Moet Hennessy Louis Vuitton posted sales below analysts' expectations for the third quarter as the luxury-goods industry grapples with inflation and high interest rates that are squeezing consumer spending.

The world's largest luxury goods conglomerate said Tuesday that sales climbed to 19.96 billion euros ($21.09 billion) in the three months to the end of September, up 9% on an organic basis from the previous year. Analysts had forecast sales of EUR20.48 billion, according to FactSet.

LVMH's core fashion and leather-goods division contributed EUR9.75 billion to total revenue, with sales up 9% organically. Selective retailing, the unit that houses Sephora, posted a 26% increase in revenue, while perfumes and cosmetics and watches and jewelry fared less well, with sales up 9% and 3% respectively. Wines and spirits is the only business unit that recorded lower sales, with a 14% contraction.

"In an uncertain economic and geopolitical environment, the group is confident in the continuation of its growth and will maintain a strategy focused on continuously enhancing the desirability of its brands, drawing on the authenticity and quality of its products, excellence in distribution and agile organization," LVMH said.

The owner of the Louis Vuitton, Dior and Celine brands is the first big luxury group in Europe to report third-quarter sales, and investors will likely view its sales performance as a bellwether of consumers' spending behavior for the coming months.

After years of strong results fuelled by a surge in demand for luxury goods, the industry is grappling with slowing sales growth globally as customers reckon with inflation and high interest rates, particularly in the U.S.

Still, despite the industry slowdown, UBS analysts believe LVMH remains attractive in the long term. "We continue to believe its best-in-class brand portfolio, the sound fundamentals of the industry and its pricing power in an inflationary environment still position LVMH as one of the best stocks to own," they wrote in a note to clients.

Write to Mauro Orru at [e-mail]

(END) Dow Jones Newswires

October 10, 2023 12:24 ET (16:24 GMT)

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