Sales at the world’s top luxury group LVMH rose by 17 per cent in the second quarter, with a sharp rebound in China helping to offset a decline in the United States, where inflation and economic turbulence have dented demand for high-end goods.
The French company, whose 75 brands include fashion labels Louis Vuitton and Dior as well as Hennessy cognac and US jeweller Tiffany, said on Tuesday it made $23.4 billion of sales in the three months to the end of June.
The 17 per cent increase at constant exchange rates was a touch better than analyst expectations for 16 per cent growth, according to a Visible Alpha consensus.
LVMH’s leather goods division, home to Vuitton and Dior, grew revenues by 21 per cent, also just above the expected 20 per cent increase.
The narrow beat for a company that routinely delivers results ahead of expectations, and is regarded as a bellwether for the luxury industry, led some analysts to say the sector was moving towards a more steady path after years of stellar growth as consumer demand normalises after the post-pandemic euphoria.
Finance chief Jean-Jacques Guiony told reporters he was “very satisfied” with the rebound in China, which makes up the bulk of Asian sales. The region – excluding Japan – posted 34 per cent growth compared to last year, when strict Covid-19 restrictions hit sales and emptied stores in China.
But he refrained from giving an outlook for the rest of the year.
The pace of the Chinese recovery and future growth prospects have become a major talking point among investors after lacklustre economic data and cautious comments from Cartier-owner Richemont weighed on luxury shares last week.
“The global mood is not one of revenge buying like we saw in 2021 and 2022, so we’re talking more about normalisation than anything else,” Guiony said.
“We have no visibility, we are not pessimistic and don’t have a reason to be in China. In the United States, we see it’s not as good as it was,” he added. US sales fell by 1 per cent over the period, with weak cognac sales dragging down the wines and spirits division.
The decline in demand for entry level products in the United States has not been seen in China, Guiony said. High youth unemployment in China, where the average age of consumers is 28, younger than other parts of the world, has been a particular source of concern for the industry.
- Reporting by Mimosa Spencer Editing by Silvia Aloisi and Mark Potter, of Reuters.
