LVMH Q3 sales slide on weaker China performance

Investing.com -- Shares in luxury giant LVMH (EPA:LVMH ) slumped on Wednesday after the Louis Vuitton owner posted a surprise drop in third-quarter sales and flagged an "uncertain" trading environment.

The Paris-based group, which is often seen as a marker for the rest of the high-end goods industry, reported a 3% decrease in revenues to 19.1 billion euros in the three months ended on Sept. 30 versus the year-ago period.

Analysts had anticipated organic growth of 2%, according to Barclays.

Sales in Asia excluding Japan declined by 16% in particular, fueling concerns over weak consumer spending in the crucial Chinese luxury market. In a call with analysts, Chief Financial Officer Jean-Jacques Guiony said the company still believed in the future of its Chinese operations, but added that consumer confidence in the country had slid to the all-time lows of the COVID-19 era.

Despite the setback in China, the company emphasized resilience in its core markets, noting that Europe and the US posted slight growth. 

Meanwhile, fashion and leather goods, the group's largest segment, saw a 5% drop in organic revenue in the third quarter, disappointing expectations for growth of 0.5%, although LVMH highlighted strong brand visibility with Louis Vuitton and Christian Dior during major events like the 2024 Olympic Games. 

LVMH peers like Gucci-parent Kering (EPA:PRTP ), Hermes (EPA:HRMS ) and Burberry (LON:BRBY ) were all lower in early European trade following the report.

"The outlook from here is likely more cautious in the coming quarters, with limited visibility for China bottoming and/or US/Europe acceleration," analysts at RBC Capital Markets said in a note to clients.

Elsewhere, analysts at Bernstein called LVMH the "weakest among quality names", but said they would recommend investors "buy in steps at the lower end of the trading range."

(Sam Boughedda contributed reporting.)

Source: Investing.com