LVMH’s Antoine Arnault does not think that luxury is in trouble. Speaking to CNBC’s Squawk Box Europe last Friday, the image and environment director described the market as resting on a plateau and not at all catastrophic right now.
LVMH Group has recently reported revenue of €18.5 billion (US$20.7 billion) for the quarter ended September 30, up 1 per cent year on year. Four of the group’s five business groups grew. The United States, Europe and Japan each expanded at mid-single-digit rates.
However, its biggest division, Fashion & Leather Goods, saw sales falling 5 per cent organically.
LVMH shares, already down roughly 40 per cent this year according to Reuters, fell again on Tuesday, with Hermès, Kering and Richemont pulled lower with it.
As the first major luxury group to report each quarter, LVMH tends to set the tone for the sector, and this time the tone was cautious.
Chief financial officer Cécile Cabanis attributed the weakness to spending by Chinese customers, which fell by a mid-teens percentage in the quarter. On the Mainland the decline reached double digits.
Chinese shoppers travelling abroad cut back by a mid-single-digit percentage. Asia excluding Japan, about 27 per cent of group revenue, was the only region to shrink.
The damage was concentrated in Fashion & Leather Goods, which accounted for almost 45 per cent of group revenue in the quarter.
Within that division, Louis Vuitton performed slightly below the average, Cabanis said. She added that a logistics issue had shaved just over one percentage point off Louis Vuitton’s organic growth in the quarter, and ruled out price cuts or other shortcuts to revive growth.
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