LVMH Moet Hennessy Louis Vuitton, the world’s largest luxury goods conglomerate, reported sales below analysts’ expectations for the third quarter. The industry is facing challenges from inflation and high interest rates, which have led to a decline in consumer spending.
Sales for the three months ending in September reached 19.96 billion euros ($21.09 billion), a 9% increase on an organic basis compared to the previous year. However, analysts had anticipated sales of EUR20.48 billion, according to FactSet.
LVMH’s core fashion and leather-goods division contributed EUR9.75 billion to the total revenue, with sales growing by 9% organically. The selective retailing unit, which includes Sephora, experienced a substantial 26% increase in revenue. On the other hand, sales for perfumes and cosmetics and watches and jewelry increased by 9% and 3% respectively. Wines and spirits were the only business segment that recorded lower sales, with a 14% contraction.
Despite the challenging economic and geopolitical environment, LVMH expressed confidence in its growth continuation. The company plans to maintain a strategy focused on enhancing the desirability of its brands through product quality, excellent distribution, and an agile organization.
As the first major luxury group in Europe to report third-quarter sales, LVMH’s performance will likely serve as an indicator of consumer spending behavior in the coming months.
Although the industry is experiencing a slowdown, UBS analysts believe LVMH remains an attractive long-term investment. They consider LVMH’s best-in-class brand portfolio, strong industry fundamentals, and pricing power in an inflationary environment as reasons for optimism.