LVMH Q2 Sales Climb 19%, Offsetting Slower China

A logo of LVMH is seen at its exhibition space, at the Viva Technology conference dedicated to innovation and startups at Porte de Versailles exhibition center in Paris, France June 15, 2022. (Reuters)
A logo of LVMH is seen at its exhibition space, at the Viva Technology conference dedicated to innovation and startups at Porte de Versailles exhibition center in Paris, France June 15, 2022. (Reuters)
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LVMH Q2 Sales Climb 19%, Offsetting Slower China

A logo of LVMH is seen at its exhibition space, at the Viva Technology conference dedicated to innovation and startups at Porte de Versailles exhibition center in Paris, France June 15, 2022. (Reuters)
A logo of LVMH is seen at its exhibition space, at the Viva Technology conference dedicated to innovation and startups at Porte de Versailles exhibition center in Paris, France June 15, 2022. (Reuters)

Sales at LVMH, the world's largest luxury group, rose by 19% in the three months to June, as robust growth in the US and China helped it offset a new round of lockdowns in China.

LVMH, which owns dozens of high-end labels such as Tiffany, said sales came to 18.73 billion euros ($18.95 billion) in the second quarter, beating analyst expectations for 17.13 billion euros in a Visible Alpha consensus cited by UBS.

The growth pace in the second quarter was a tad slower than in the first three months of 2022, when group sales had climbed by 23%.

Demand for fashion and leather goods from its star labels Louis Vuitton and Dior eased up slightly from high levels at the start of the year, rising by 19% in the quarter, as flows of travelling shoppers returning to Europe helped to mitigate disruptions to business in China.

LVMH has been tapping into strong, post-pandemic demand for its designer labels as socializing resumes and shoppers continue to spend savings from lockdowns, brushing off concerns about turbulent stock markets and rising prices.

The company's strong second quarter is setting the tone for rivals, with Gucci-owner Kering reporting its own first half results on July 27 and Hermes on July 29.



Lululemon Shares Tumble as Yogawear Firm Warns Tariffs Will Crimp Profit

FILE PHOTO: A logo is displayed inside a Lululemon outlet retail store at Bicester Village in Oxfordshire, Britain, August 21, 2024. REUTERS/Hollie Adams/File Photo
FILE PHOTO: A logo is displayed inside a Lululemon outlet retail store at Bicester Village in Oxfordshire, Britain, August 21, 2024. REUTERS/Hollie Adams/File Photo
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Lululemon Shares Tumble as Yogawear Firm Warns Tariffs Will Crimp Profit

FILE PHOTO: A logo is displayed inside a Lululemon outlet retail store at Bicester Village in Oxfordshire, Britain, August 21, 2024. REUTERS/Hollie Adams/File Photo
FILE PHOTO: A logo is displayed inside a Lululemon outlet retail store at Bicester Village in Oxfordshire, Britain, August 21, 2024. REUTERS/Hollie Adams/File Photo

Lululemon Athletica's shares fell 21% in premarket trading on Friday, as the maker of high-end leggings warned that tariff-related costs and uneven demand in key markets of North America and China will dent its profits this year.

The Canadian firm, whose Align yoga pants sell for $128 apiece on its website, will raise prices "modestly" for a "small portion of the assortment" and ramp up discounts for the rest of the year, company executives said.

Lululemon has struggled to retain shoppers, despite its efforts to introduce new styles of sports bras and athletic jackets, as it faces intense competition from trendier and more affordable brands in North America and mainland China.

"Despite (Americas) decline, management continues to prioritize product newness and China expansion over addressing a pullback from core customers and evident traffic declines," Jefferies analyst Randal Konik said in a note.

"We believe this misalignment is concerning."

Lululemon joins sportswear rivals Nike and On in raising prices in the US as erratic trade tactics under President Donald Trump rattle global markets and fuel fears of a recession.

Lululemon trimmed its 2025 earnings forecast and said it expects margins to come under pressure from the proposed tariffs, which will impact products from some of its largest sourcing hubs in Vietnam, Cambodia and Sri Lanka.

"My sense is that in the US, consumers remain cautious right now, and they are being very intentional about their buying decisions," CEO Calvin McDonald said on a post-earnings call.

The company's stock, which is down about 14% this year, was trading at $261.90 before the bell on Friday. The news dragged Nike's shares down 1.4%.

Lululemon's forward price-to-earnings multiple, a common benchmark for valuing stocks, is 21.46, compared to that of 31.37 for Nike and 9.54 for Gap.