LVMH shares tumble after poor sales
Luxury conglomerate LVMH saw a drop in sales in third quarter (Q3), as demand for handbags moderated and sales for spirits fell after several years of stellar growth.
The French group, controlled by the world's wealthiest individual, Bernard Arnault, said sales grew 9 per cent in Q3 to €19.9 billion, down from a 17 per cent rise in the preceding quarter, reflecting softer luxury sales worldwide, notably in the US and Europe. Sales at LVMH's fashion and leather goods division - its biggest - grew 9 per cent in Q3, a slower pace than the 21 per cent growth in the second quarter and below estimates of 11.2%.
LVMH shares
Shares of the luxurious goods company LVMH have taken a big hit at the beginning of trading, reaching their lowest point in almost a year. The reason for this drop is that the company reported a decline in the demand for handbags in the third quarter, as well as a slowdown in the sales of its spirits division, which had been growing strongly before. Despite these challenges, LVMH's overall sales still increased by 9 percent to almost 20 billion euros.
One interesting thing to note is that Asia, excluding Japan, performed well with an 11 percent increase in the quarter. However, this is a drop from the 34 percent growth seen in the previous three months. LVMH has mentioned that there haven't been any significant changes in China. In Europe, most countries are experiencing a mid single-digit growth, according to LVMH's statement.
LVMH's share price
The fashion and leather goods unit, which is the biggest division of LVMH, grew by 9 percent in the third quarter. Even though this is a slower pace compared to the 21 percent growth seen in the second quarter, it is still lower than the expected growth of 11.2 percent. As a result, the overall decline in performance has caused a fall in LVMH's share price, which is now down 6.1 percent after only thirty minutes of trading. Looking at the chart of the share price, it's clear that all the gains made earlier this year have been erased. LVMH had been doing well based on the hope that China, which came out of lockdowns earlier, would continue buying their products. However, China has actually been one of the weaker regions for the company. Today, the share price is trading at levels not seen since 2022.
LVMH share drop
In conclusion, LVMH's shares have dropped significantly due to a decline in demand for handbags and spirits. Despite this, the company's sales still increased overall. The biggest division, fashion and leather goods, also saw growth, although at a slower pace. However, the disappointing performance led to a fall in LVMH's share price, which has wiped out all the gains made earlier this year. China has not been as strong of a market as anticipated, and the share price is now at its lowest point in several
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