The world's largest luxurious group LVMH collapses after gross sales losses

People walk past the building housing the Louis Vuitton store in Lisbon, Portugal on July 21, 2024.

Luis Boza | Only photo |

Shares in the world's largest luxury group LVMH fell on Wednesday after the company's second-quarter sales fell below analyst consensus on Tuesday.

LVMH shares were last down 3.96 percent at 11:30 a.m. London time. Other stocks in the luxury sector, including Gucci owner Kering, which will announce its results on Wednesday, also fell.

Second-quarter revenue was €20.98 billion ($22.7 billion), compared to the €21.6 billion LSEG analysts had expected.

Sales in Asia (excluding Japan) fell 14 percent in the second quarter compared to the same period last year, LVMH said. In the first quarter of 2024, sales in the region had already fallen by 6 percent.

Meanwhile, sales in Japan rose 57% in the three months to the end of June compared to the same period last year.

In the first half of the year, sales in Asia (excluding Japan) fell 10% compared to the first six months of 2023, while sales in Japan rose 44%, LVMH said.

The “exceptional growth” in Japan in the first half of the year was “driven primarily by purchases by Chinese travelers,” the company said. Japan was one of the strongest regions for fashion and leather goods, perfume and cosmetics, and watches and jewelry during this period, LVMH added.

By company group, sales in the wine and spirits sector fell by 5% year-on-year in the second quarter of 2024, and the watches and jewelry sector recorded a decline of 4% over the same period.

In the first half of the year, “Europe, the United States and China were the regions most affected by lower consumer demand in the wine and spirits sector,” LVMH noted, adding that the market environment in China was “unfavorable.”

Weakening demand in China has been weighing on the entire luxury goods sector for several quarters as the world's second-largest economy continues to struggle with the effects of the Covid-19 pandemic.

LVMH is the latest luxury brand to report weak performance this year: Hugo Boss lowered its 2024 forecast and Burberry issued a profit warning earlier this month.