LVMH shares fell on Wednesday after the luxury goods giant warned of an “uncertain economic and geopolitical environment” and its latest results missed analysts’ expectations.
The conglomerate, which owns Dior, Tiffany & Co., Fendi, and more, is an industry leader. The company’s results, released after European markets closed on Tuesday, sent shockwaves through the luxury goods sector, especially after slowing sales in the all-important Chinese market.
LVMH, run by French billionaire Bernard Arnault, announced that sales for the last quarter fell 3% from a year earlier. The company also reported that sales in its fashion and leather goods division, which accounts for about half of the conglomerate’s revenue, fell for the first time since the early days of the coronavirus pandemic.
Shares of other fashion and lifestyle brands, including Hermès and Gucci owner Kering, also fell.
Investors are nervous about China’s economy. Last month, the Chinese government introduced a series of measures to spur a big rally in Chinese stocks, but details remain unclear about the scope of the measures aimed at boosting sluggish consumer spending, stabilizing the property market and strengthening banks. is.
China recently announced retaliatory penalties on European brandies (LVMH owns Moët Hennessy) in response to increased tariffs imposed by the European Union on Chinese-made electric vehicles.
LVMH Chief Financial Officer Jean-Jacques Guiony told analysts on Tuesday that “consumer confidence in mainland China today is back to its lowest level ever recorded during the COVID-19 period.” said.
Some industry insiders expect LVMH to take action. “We do not know whether this quarter will significantly change the story for LVMH,” Bernstein analysts said in a note. Although details are unclear, analysts said China’s stimulus signals are encouraging and demand will return.
China’s housing minister is scheduled to hold a press conference on Thursday where he is expected to outline further measures to boost growth.
Danielle Kaye contributed reporting.
