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2024 will not go down in the annals of LVMH as a memorable vintage.<\/p>\n
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While the world’s Number One in luxury goods has just revealed a third quarter that was less good than expected<\/strong><\/b> by analysts, it will also have to make a significant contribution to France’s budgetary recovery, by paying 700 to 800 million euros as part of the new 2025 exceptional contribution.<\/strong><\/b><\/p>\n <\/p>\n The luxury leader has not escaped the slowdown in the global luxury goods market, particularly in China. The decline (-4.4% on a reported basis and -3% on a like-for-like basis to just over 19 billion euros) posted by LVMH in the third quarter <\/strong><\/b>is indeed more severe than those expected by financial analysts,<\/strong><\/b> who were counting on around 20 billion euros instead.<\/p>\n <\/p>\n Above all, LVMH is on a slippery slope, whereasin the first half of the year, its sales rose by +2% on a comparable basis<\/strong><\/b>, but fell by 1% on a reported basis.<\/p>\n\n <\/p>\n For the first nine months of the year, sales were stable on a comparable basis<\/strong><\/b>, but down 2% on a reported basis, at 60.75 billion euros, \u201cdespite the current context and a high basis of comparison after the years of exceptional post-Covid growth\u201d, the Group points out.<\/p>\n <\/p>\n Geographically, \u201cEurope and the United States reported slight growth<\/strong><\/b> on a like-for-like basis\u201d, while \u201cthe rest of Asia reflected strong growth in spending by Chinese customers in Europe and Japan.<\/strong><\/b><\/p>\n <\/p>\n For its part, \u201cJapan continues to report double-digit sales growth\u201d, but LVMH attributes the third-quarter<\/strong><\/b> underperformance \u201cessentially to lower growth observed\u201d in the Japanese archipelago, \u201cessentially due to the rise in the yen<\/strong><\/b>\u201d.<\/p>\n <\/p>\n <\/p>\n Generally speaking, the Group’s various divisions showed contrasting trends.<\/strong><\/b><\/p>\n The red lantern, Wines & Spirits<\/strong><\/b>, posted an organic decline of 7% in the third quarter<\/strong><\/b> and 8% over the first nine months to 4.2 billion euros.<\/p>\n <\/p>\n But while the Champagne<\/strong><\/b> business, \u201cdown against a backdrop of continued normalization of post-Covid demand\u201d \u201cremains in significant growth relative to 2019<\/strong><\/b>\u201d, \u201cHennessy cognac is, for its part, penalized by weak local demand on the Chinese market<\/strong><\/b>\u201d. And the situation is unlikely to improve as the Middle Kingdom has just imposed an additional surtax on this category of spirits in reaction to Europe’s measures against its electric vehicles…<\/p>\n <\/p>\n In this division, however, LVMH is responding with recent initiatives to capture new customers. In addition to a new joint venture with Beyonc\u00e9<\/strong><\/b>, resulting in a new whisky called SirDavis, the group has forged a strategic partnership with French Bloom, leader in prestige alcohol-free effervescents.<\/strong><\/b><\/p>\n <\/p>\n By contrast, Fashion & Leather Goods,<\/strong><\/b> the Group’s largest business, \u201cproved resilient and gained market share\u201d, as the Group pointed out. In the first nine months, sales fell by just 1% on a comparable basis (-3% on a reported basis)<\/strong><\/b> to 29.9 billion euros.<\/p>\n <\/p>\n Its decline on a comparable basis (-5%) was, however, more marked in the third quarter<\/strong><\/b> even though \u201cLouis Vuitton and Christian Dior<\/strong><\/b> both benefited from good visibility during the summer on the occasion of the<\/strong><\/b> Paris 2024 Olympic and Paralympic Games<\/strong><\/b> \u201d. And the group is also counting on its two new artistic directors, Michael Rider at Celine and Sarah Burton at Givenchy,<\/strong><\/b> to ensure future success.<\/p>\n <\/p>\n Another division that performed well over the first nine months (+5% on a comparable basis to 6.1 billion euros)<\/strong><\/b>, including thethird quarter (+3%<\/strong><\/b>), is Perfumes & Cosmetics, which \u201c<\/strong><\/b>benefits from a strong policy of innovation and highly selective distribution\u201d. Christian Dior<\/strong><\/b> fragrances were particularly successful, and are counting on Rihanna, the new muse of J’adore<\/strong><\/b>, to continue the success story of the women’s fragrance.<\/p>\n <\/p>\n Selective Retailing<\/strong><\/b> is also doing well, with sales up 6% on a comparable basis<\/strong><\/b> to 12.5 billion euros in the first nine months, and +2% in the third quarter<\/strong><\/b>.<\/p>\n <\/p>\n However, its brands are not progressing at the same speed. While \u201cSephora turned in a remarkable performance<\/strong><\/b> and continues to gain market share in North America, Europe and the Middle East\u201d, travel retailer DFS remains below its pre-Covid 2019 level of activity<\/strong><\/b>, with \u201ccontrasting trends depending on tourist numbers in different destinations\u201d. The Bon March\u00e9 department<\/strong><\/b> store , for its part, continues to \u201cprogress\u201d,<\/strong><\/b> driven by \u201cits strategy of differentiation with a constantly renewed offer and an original program of events\u201d.<\/p>\n <\/p>\n Watches and Jewelry<\/strong><\/b>, on the other hand, are not doing so well, posting a comparable decline of 3%<\/strong><\/b> to 7.5 billion euros in the first nine months and 4% in the third quarter<\/strong><\/b>. Its Chaumet<\/strong><\/b> jewelry house nevertheless benefited from high visibility<\/strong><\/b> during the summer with the presentation of medals for the<\/strong><\/b> Paris 2024 Olympic and Paralympic Games<\/strong><\/b>, designed by its design studio.<\/p>\n <\/p>\n An insistent rumor, however, points to the disappointing performance of Tiffany & Co.<\/strong><\/b> The iconic American brand is nevertheless multiplying its initiatives<\/strong><\/b>, such as its \u201cWith Love, Since 1837\u201d global communications campaign, its new Tiffany Titan by Pharrell Williams<\/strong><\/b> collection, and the roll-out of a new boutique concept… With success, the group assures us.<\/p>\n <\/p>\n \u201cDespite an uncertain economic and geopolitical context\u201d, LVMH assures that it \u2018remains confident<\/strong><\/b>\u2019 and \u2018is counting on the dynamism of its brands and the talent of its teams to further strengthen its lead in the global luxury market in 2024\u2019.<\/strong><\/b><\/p>\n <\/p>\n <\/p>\n In France, however, the Group faces a new challenge. The group is in fact targeted by the exceptional contribution requested from French companies with sales in excess of one billion euros,<\/strong><\/b> as part of the draft 2025 budget.<\/p>\n <\/p>\n \u201cThe impact of the additional corporate income tax in France is expected to be between 700 and 800 million euros”<\/strong><\/b>, said Jean-Jacques Guiony, LVMH’s Chief Financial Officer<\/strong><\/b>, during an interview with analysts on the occasion of the publication of the group’s sales figures.<\/p>\n <\/p>\n He pointed out that France \u201crepresents 7% of<\/strong><\/b>LVMH’s sales, a third of pre-tax income and 40% of taxes<\/strong><\/b>\u201d. These clarifications are designed to ensure \u201cthat no one has the impression that we are not contributing to the budgetary efforts currently underway\u201d…<\/p>\n <\/p>\n For its part, the Paris Bourse<\/strong><\/b> received a cool reception from LVMH’s poor performance, which penalized all luxury goods players. At the opening, LVMH shares were down 6.6%, Kering 5.5% and Herm\u00e8s 3.5%.<\/strong><\/b><\/p>\n <\/p>\nSlippery slope<\/h2>\n
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Contrasting trends<\/h2>\n
Fashion & Leather Goods holding up well<\/h2>\n
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Sephora still in top form<\/h2>\n
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Exceptional contribution<\/h2>\n
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