LVMH Shares Drop after Missing Second-quarter Estimates

A man walks past a shop of fashion house Dior in Paris, France, April 15, 2024. REUTERS/Manon Cruz/File Photo Purchase Licensing Rights
A man walks past a shop of fashion house Dior in Paris, France, April 15, 2024. REUTERS/Manon Cruz/File Photo Purchase Licensing Rights
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LVMH Shares Drop after Missing Second-quarter Estimates

A man walks past a shop of fashion house Dior in Paris, France, April 15, 2024. REUTERS/Manon Cruz/File Photo Purchase Licensing Rights
A man walks past a shop of fashion house Dior in Paris, France, April 15, 2024. REUTERS/Manon Cruz/File Photo Purchase Licensing Rights

Shares in LVMH (LVMH.PA) fell as much as 6.5% in early Wednesday trade and were on track for their biggest one-day drop since October 2023 after second-quarter sales growth at the French luxury goods giant missed analysts' consensus estimate.

The world's biggest luxury group said late Tuesday its quarterly sales rose 1% year on year to 20.98 billion euros ($22.76 billion), undershooting the 21.6 billion expected on average by analysts polled by LSEG.

At 1000 GMT, LVMH's shares were down 4.5%.

The earnings miss weighed on other luxury stocks, with Hermes (HRMS.PA), down around 2% and Kering (PRTP.PA), off 3%.

Kering is scheduled to report second-quarter sales after the market close and Hermes reports on Thursday, Reuters reported.

Jittery investors are looking for evidence that the industry will pick up from a recent slowdown, as inflation-hit shoppers hold off from splashing out on designer fashion.

JPMorgan analyst Chiara Battistini cut full year profit forecasts by 2-3% for the group, citing softer trends at LVMH's fashion and leather goods division, home to Louis Vuitton and Dior.

"The soft print is likely to add to ongoing investors’ concerns on the sector more broadly in our view, confirming that even best-in-class players like LVMH cannot be immune from the challenging backdrop," said Battistini in a note to clients.

The weakness of the yen, which has prompted a flood of Chinese shoppers to Japan seeking bargains on luxury goods, added pressure to margins, another source of concern.

Equita cut 2024 sales estimates for LVMH by 3% - attributing 1% to currency fluctuations - and lowered its second half organic sales estimate to 7% growth from 10% growth previously.

The lack of visibility for the second half beyond the easing of comparative figures - as the Chinese post-pandemic lockdown bounce tapered off a year ago - is unlikely to improve investor sentiment to the luxury sector, Citi analyst Thomas Chauvet said in an email to clients.

"No miracle with the luxury bellwether; sector likely to remain out of favour," he wrote.

Jefferies analysts said the miss came as investors eye Chinese shoppers for their potential to "resume their pre-COVID role as the locomotive of industry growth and debate when Western consumers will have fully digested their COVID overspend".

LVMH shares have been volatile since the luxury slowdown emerged, and are down about 20% over the past year, with middle-class shoppers in China, the world's No. 2 economy, a key focus as they rein in purchases at home amid a property slump and job insecurity.

LVMH offered some reassurance, with finance chief Jean-Jacques Guiony telling analysts during a call on Tuesday that Chinese customers were "holding up quite well," while business with US and European customers was "slightly better".



Pharrell Williams Teams with Nigo for Vuitton Show at the Louvre

A model presents a creation for the Louis Vuitton Menswear Ready-to-wear Fall-Winter 2025/2026 collection as part of the Paris Fashion Week, in Paris on January 21, 2025. (Photo by JULIEN DE ROSA / AFP)
A model presents a creation for the Louis Vuitton Menswear Ready-to-wear Fall-Winter 2025/2026 collection as part of the Paris Fashion Week, in Paris on January 21, 2025. (Photo by JULIEN DE ROSA / AFP)
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Pharrell Williams Teams with Nigo for Vuitton Show at the Louvre

A model presents a creation for the Louis Vuitton Menswear Ready-to-wear Fall-Winter 2025/2026 collection as part of the Paris Fashion Week, in Paris on January 21, 2025. (Photo by JULIEN DE ROSA / AFP)
A model presents a creation for the Louis Vuitton Menswear Ready-to-wear Fall-Winter 2025/2026 collection as part of the Paris Fashion Week, in Paris on January 21, 2025. (Photo by JULIEN DE ROSA / AFP)

Louis Vuitton men's creative director, Pharrell Williams, drew his audience to a rear courtyard of the Louvre Museum after dark on Tuesday for a fall-winter catwalk show, kicking off Paris Fashion Week with a line-up of jazzed up streetwear.
Models strode around the set to marching music, parading chunky wool suits, short bomber jackets, leather bermudas and coats in pastels, autumn tones and psychedelic renditions of the brand's signature logo patterns. There were colorful Speedy bags, lobster-claw charms, pearl embellishments, thick jewelry and utility pockets in suede leather. For this collection, Williams, who is also famous as a musician, teamed up with his longtime collaborator, Japanese fashion designer Nigo, currently creative director of another LVMH-owned label, Kenzo.
The pair have been active in street culture for decades, founding the label Billionaire Boys Club in 2003 and playing a role in streetwear's rise to prominence, blending music with fashion.
In the front row, LVMH CEO Bernard Arnault, who attended US President Donald Trump's inauguration on Monday, sat between his wife, Helene Mercier, and NBA basketball player Victor Wembanyama, tapping his foot to the music.
Paris men's Fashion Week runs through Jan. 26 and is followed by Haute Couture shows.
Globally, high-end labels are grappling with a rare slowdown in appetite for fashion and accessories, with the key Chinese market a particular source of concern, while hopes are pinned on the US market for growth this year.