LVMH posts modest Q3 sales beat as China demand weakens

LVMH Moët Hennessy - Louis Vuitton Société Européenne reported third-quarter sales of €18.50 billion on Oct. 12, narrowly surpassing Visible Alpha consensus estimates of €18.46 billion. Organic growth for the quarter was 1%, below the 1.3% forecast by analysts. The luxury group attributed the shortfall to a weaker macroeconomic backdrop and subdued demand in China, though solid growth in the US, Europe and Japan, as well as a favorable currency effect, provided some support.

The update came as luxury stocks have come under pressure in recent months, with LVMH shares down nearly 20% since July, according to S&P Capital IQ Pro, amid concerns over slowing Chinese consumer spending and broader global uncertainty.

Here are the key takeaways of the earnings summaries compiled by S&P Global ProntoNLP, along with Visible Alpha prequarter consensus estimates and revised outlook:

➤ Wines and spirits emerged as the standout segment, with third-quarter revenue rising 7.4% year over year to €1.43 billion, beating consensus by 5.3%. The division benefited from strong demand for cognac and spirits, with sales up 10% and exceeding expectations by 12%. Champagne and wines also delivered better-than-expected growth.

➤ Fashion and leather goods, LVMH's largest division and a bellwether for luxury demand, was the main area of weakness. Revenue fell 3% year over year to €8.25 billion, missing consensus by 1.7%. The decline reflected ongoing softness in Chinese luxury spending, which weighed on sectorwide results, including peers such as Kering SA and Compagnie Financière Richemont SA.

➤ Geographically, performance was mixed. Japan stood out, with revenue up 14.7% year over year, beating expectations by 3.9%. Europe and France also outperformed, posting growth of 2.3%. The US market remained resilient, delivering 6.8% growth in line with forecasts. In contrast, Asia was the primary drag, with revenue down 1.5% year over year, missing consensus by 4.2%, as Chinese demand continued to lag.

This article was published by Visible Alpha, part of S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.