The luxury segment chokes, and its roaring past seasons of growth could be over. The proof comes from the fact that LVMH’s sales, grew 9% during the third quarter of 2023 (to 19.96 billion euro). Much lower than the +17% of the previous quarter and also lower than the estimates from Visible Alpha, which had forecasted an 11.5% increment. Revenue from the Fashion & Leather Goods Division (the largest one), has grown 9% during the 3rd quarter. A slower rate compared to the +18% of the first semester and +21% of the second quarter. Celine, Loewe, Loro Piana and Marc Jacobs prove to be top-performers. During the first nine months of 2023, LVMH generated 56.48 billion euro in sales, +10% on 2022.
The luxury segment chokes
A slowdown for the luxury segment was expected, and it was confirmed. At least for LVMH. “After 3 roaring and exceptional years, the growth is converging towards numbers more in line with the historic average”, say Jean-Jacques Guiony, financial director of LVMH to analysts. The manager pointed out that Europe slowed, while China’s demand for leather goods and fashion items is on the same level as two years ago. “Beside from the fact that purchases made abroad are recovering as travel recovers”. The USA haven’t shown particular fluctuations (+2%).
Dior also slows
The Fashion & Leather Goods Division recorded a 9% increase in sales to 9.75 billion euro. Analysts had forecasted +10% (source Reuters). With regards to individual brands, Guiony explains that Louis Vuitton and Dior are close to an average growth rate of +9%. Celine, Loewe, Loro Piana and Marc Jacobs are overperforming compared to the average (source Vogue Business).
When asked specifically about Dior, LVMH’s financial director said: “It’s impossible to grow a business 30% year on year forever. The brand needs to consolidate. We can’t open too many stores, or we would end up with excess distribution. We also need to decide what the right dimension for the distribution chain is and how we want to express the brands in terms of category. That approach should generate healthy growth in the future. I think a slowdown of economic growth is absolutely normal after these fantastic years. We will continue to gain in the future, believe me”.
4th quarter okay
Looking at the 4th quarter, Guiony pointed out that comparing results in Asia will be simpler compared to the third quarter, and the same goes for the USA (in a way): “There are so many things at play, so I will not make forecasts”, he concluded.