LVMH opened the third-quarter earnings season with a soft result from its most important division. Revenue from fashion and leather goods dropped 5% to €8.24 billion, according to Vogue, a steeper slide than the 2% decline analysts had expected.
The miss interrupts a recovery that had only just begun. The division grew 1% in the second quarter, a result read as a turning point after seven straight quarters of contraction. Group-wide sales rose 1% to €18.5 billion, close to the 1.2% consensus and slower than the 3% gain of the previous quarter.
A weaker consumer mood and brand-specific setbacks
On Monday's earnings call, CFO Cécile Cabanis said the quarter brought a tougher backdrop for Chinese shoppers, with confidence slipping right at the start of the period, while the situation in the Middle East remained a drag. Her answer was to look inward: "self-help is a priority for performance to improve," she said, adding that progress is visible across the brands.
Group sales fell 5% in Asia excluding Japan, but rose elsewhere: 5% in the US, 4% in Europe and 6% in Japan.
Louis Vuitton had its own troubles. Cabanis said a legal fight with the tea brand Molly Tea, which was ordered to pay roughly $1.5 million for infringing the house's four-petal emblem, set off backlash on Chinese social media. She called the exact impact hard to measure but said it was probably negative early in the quarter. A problem with a shipping partner, now fixed, took just over one percentage point off growth. Louis Vuitton's sales landed just under the division's 5% decline.
Dior, Celine and the creative reshuffle
LVMH does not report sales by brand, but Cabanis offered a read on the big names. Dior was flat. Loro Piana is still growing strongly, and Rimowa is also outperforming.
Asked whether Jonathan Anderson's first pieces at Dior had disappointed, she said they had not. Women's ready-to-wear is showing the clearest appetite, she said, while men's ready-to-wear is less advanced and needs more work. In bags, the focus is on updating established icons while preparing new ones.
Celine drew her most upbeat comments. She said it is gaining momentum, with double-digit growth in the market she cited, strong footwear growth and a standout showing from the Soft Triomphe handbag. LVMH is confident it can become a growth driver, she said.
At Fendi, where Maria Grazia Chiuri is the newest designer change, Cabanis said it will take a season for the new work to filter into sales, though a softer Baguette is performing well. At Loewe, she pointed to early momentum in recently launched bags.
Other divisions and what comes next
Elsewhere in the group, selective retailing, which includes Sephora, rose 8%. Watches and jewelry and wines and spirits each gained 6%, and perfumes and cosmetics rose 1%.
LVMH is often treated as a bellwether for luxury, so attention now turns to Kering and Hermès, both reporting on October 22. HSBC estimates point to a 1.6% decline for Kering and 5.3% growth for Hermès, each slower than in the second quarter.
Reporting sources: Vogue, “LVMH’s Fashion Sales Fall 5% in Q3”.