LVMH shares plunge after luxury giant reveals sharp slowdown in sales growth
By Anna Cooban, CNN
London (CNN) — Shares of LVMH fell as much as 8% Wednesday after the luxury goods conglomerate said revenue growth in the third quarter was much slower than in the first half of the year.
The French company posted earnings late Tuesday that it said showed sales were returning to pre-pandemic norms, signaling an end to three years of bumper growth propelled by pent-up consumer demand. That strength has driven a 65% rise in the firm’s stock since October 2020.
“After three roaring years, and outstanding years, growth is converging toward numbers that are more in line with historical average,” Jean-Jacques Guiony, LVMH’s chief financial officer, told analysts on a call Tuesday, as cited by Reuters.
By early afternoon in Paris on Wednesday, LVMH shares traded almost 6% down, having pared back the day’s earlier losses.
The company’s revenue grew 9% in the third quarter to nearly €20 billion ($21 billion), down from a 17% rise in the second quarter and the same jump in the first quarter. The group owns fashion and drinks brands such as Louis Vuitton and Moët & Chandon, and is considered a bellwether for the performance of the broader luxury sector.
The company’s wines and spirits division saw a 14% plunge in third-quarter sales. LVMH said in a press release that demand for its Hennessy cognac in the United States had been dented by the economic environment, retailers’ high inventories and a “normalization” of demand after the pandemic.
LVMH is also contending with lackluster demand in China, one of its biggest markets, where an economic rebound that followed the lifting of Covid restrictions late last year has faded fast.
In Tuesday’s results, LVMH said its revenue in Asia excluding Japan rose 11%, less than a third of the 34% growth notched in the second quarter. The company does not provide separate figures for China.
The-CNN-Wire
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