On Tuesday, for the third quarter of 2024, global luxury leader LVMH reported a 5% sales decline for its fashion and leather goods division, inclusive of Louis Vuitton, Dior and Loewe. This dip came as a surprise to analysts, who had projected growth of up to 2% for the division.
The results show that even industry giants with big marketing budgets are feeling the pressure of a slowing global economy. Group-wide, LVMH’s third-quarter sales fell 3% on an organic basis to €19.1 billion ($21 billion), demonstrating “good resilience in the current context,” according to the company’s press statement. The fashion and leather goods segment saw a 3% decline to €30.9 billion ($32.4 billion), watches and jewelry dropped 5% to €7.95 billion ($8.35 billion) meanwhile, selective retailing grew 1% to €12.4 billion ($13.02 billion) year-over-year.
The underperformance was felt across key brands in LVMH’s portfolio. Louis Vuitton experienced softer consumer demand in China and economic pressure in other markets. According to LVMH CFO Jean-Jacques Guiony, growth was slower than anticipated, particularly in travel and leather goods. This week, influencers were gifted the brand’s new reversible Neverfulls totes and posted reviews on TikTok and Reels.
Christian Dior also struggled to maintain momentum. Guiony confirmed that Dior faced a more significant dip than expected, despite efforts to bolster its presence with new collections, like the Miss Dior line, and high-profile exhibitions, such as the L’Or de Dior in Beijing. Meanwhile, Loewe and Loro Piana showed more stability but weren’t immune to the broader market conditions. For its part, Loro Piana reported solid momentum but a slowdown in major markets. There were no new comments on the appointment of LVMH’s new artistic directors, Michael Rider at Celine and Sarah Burton at Givenchy.
On the earnings call, Guiony acknowledged the difficulty of managing costs and growth in this environment. “Cost control is important. We will do our best, but needless to say, the current environment and numbers make this quite a challenge,” he said. However, he reinforced the company’s commitment to its long-standing strategy, emphasizing, “We still believe in staying faithful to what has been the recipe of our success over the years: innovation and quality.”
Amid the softness in China, even with the reported stimulus injection this week, Japan remains relatively strong in the Asian market. LVMH reported a 36% revenue boost in the country for the third quarter.
LVMH aims to further capitalize on the trend by expanding its luxury retail hubs through DFS Group, its travel retail division which has suffered in recent quarters. “The tourist spend in Japan is increasing, particularly driven by Chinese consumers who have been spending more there as opposed to mainland China,” said Guiony, signaling the company’s strategy to offset the slowdown in one region by targeting growth in another.
However, the strengthening yen suggests that Japan’s appeal to Chinese tourists, who have been attracted by favorable tax policies, may not be sustainable. The currency fluctuations are already dampening spending.
Guiony addressed the company’s significant sponsorship investment in the Paris Olympics, although declined to state the business impact. “We made a very big investment for the Olympics, and our brands were very visible,” he said. “Given the fact that we are by and large selling to our clients a lot of ‘made in France’ products, it was impossible for us not to back the Paris 2024 Olympics. The Olympics were more of a short-term, high-visibility effort, in contrast to the long-term partnerships like the Formula 1 sponsorship.”
But speaking earlier this week at the Hyères International Fashion, Photography and Accessories Festival, Bernard Arnault, chairman and CEO of LVMH, reiterated that the group’s success lies not in marketing but in the excellence of its artisans. “People talk a lot about marketing, but ultimately, marketing is completely secondary,” he said. According to Arnault, LVMH’s future success depends on customers recognizing the craftsmanship behind its products. However, this has been called into question with labor violation allegations against Dior and other luxury houses.
As such, the group is investing in Maison des Métiers d’Excellence, a space in Paris dedicated to showcasing the skilled artisans behind brands like Louis Vuitton, Dior and Tiffany & Co. Scheduled to open in 2026, the hub will also house LVMH’s Institut des Métiers d’Excellence, which has already trained over 3,300 apprentices in craftsmanship across 280 trades.
“We should continue to innovate, continue to have strategies that talk to our existing and potential customers,” Jean-Jacques Guiony said on the call. “We have to stay true to what we are.”
Among possible future bright spots, he pointed to the U.S. market. “On the U.S. side, we’ve seen slight improvements over the last few quarters in categories like cognac, Tiffany and fashion,” he said. “While it’s not spectacular, there is a cautious optimism that the market is slowly normalizing, with the impact of aspirational customers being less significant than before.”
While the third-quarter numbers show signs of strain, LVMH’s commitment to craftsmanship, quality and long-term strategy remains unwavering. As Guiony said, “It’s about patience and staying true to what we’ve built.”
