LVMH, the world's largest luxury goods company, saw its shares decline on Wednesday despite reporting slightly better-than-expected full-year results. Investors remain cautious about the strength of a broader recovery in the luxury sector, as declining sales in key segments raise concerns.
Shares of LVMH , the world's largest luxury goods company, dipped on Wednesday as investors reacted cautiously to the group's full-year results, which were slightly better than anticipated. The owner of prestigious brands like Louis Vuitton, Moët & Chandon, and Hennessy reported revenues of 84.68 billion euros ($88.27 billion) for 2024, surpassing the 84.38 billion euros forecast by LSEG analysts. This performance reflected organic growth of 1% compared to the previous year.
Investors had been eagerly awaiting further confirmation of a recovery in the luxury sector following a strong showing by Richemont, the owner of Cartier, which reported its highest ever quarterly sales figures during the festive shopping period. However, LVMH's results revealed declining sales in two of its key segments: fashion and leather goods, and wines and spirits. This decline raised concerns about the strength of the broader luxury market recovery.Mamta Valechha, consumer discretionary analyst at Quilter Cheviot, commented, 'After a stellar start to the reporting season for the luxury sector, anticipation had been increasing ahead of LVMH's Q4 results, which is seen as the proxy for the sector. However, the company reported a relatively underwhelming set of results yesterday evening.' LVMH attributed its revenue growth primarily to solid demand within its selective retailing division, which includes Sephora, and its perfume and cosmetics businesses. Growth was also driven by consumers in the U.S., Europe, and Japan, while the wider Asia Pacific region, particularly China, lagged behind. The French luxury giant is widely viewed as a leading indicator for the overall health of the luxury industry, which has faced considerable pressure in recent years due to declining Chinese sales and broader economic headwinds.'While LVMH saw a sequential improvement, it was less pronounced compared to Richemont and Burberry,' Valechha continued. 'Had LVMH been the first to report this earnings season, this set of results would have been digested well. However, peers had already set the bar high, so it is unsurprising to see its shares down this morning.
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