LVMH said to warn of continued luxury weakness on China woes

[PARIS] LVMH is warning investors and analysts that demand remains soft after the luxury conglomerate missed revenue estimates for the first three months of the year, sources familiar with the matter said.

With a view to managing expectations, LVMH Moet Hennessy Louis Vuitton is putting out cautious signals on second-quarter trends amid lacklustre consumer confidence, particularly in China, according to the sources, who declined to be identified discussing information that’s not public. Some of the sources suggested the company’s current quarter may show no improvement over the previous one.

The luxury market is struggling to emerge from a period of sluggishness caused in part by shoppers reining in costly purchases in China, which has been a crucial growth engine for industry majors from LVMH and Chanel to Hermes and Richemont. The industry’s outlook has grown even gloomier since US President Donald Trump last month began to impose tariffs on imports across industries and countries.

It is common for listed companies such as LVMH to brief investors and analysts in conferences, meetings or calls about their business trends after publishing results. LVMH posted its first-quarter sales results on Apr 14. The company did not immediately have a comment.

LVMH shares tumbled as much as 2.9 per cent in Paris.

In the first quarter, LVMH’s revenue in the region that includes China fell 11 per cent on an organic basis and recorded a similar drop for all of 2024.

Preliminary analyst estimates show sales for Asia-Pacific excluding Japan in the second quarter may slide by 6.4 per cent, while the key fashion and leather goods unit, which includes Louis Vuitton and Christian Dior, may see revenue fall 3.7 per cent, according to data compiled by Bloomberg. This division generates the bulk of LVMH’s profitability.

The region that includes China accounts for 30 per cent of LVMH’s total sales, while the US garners 24 per cent.

Shares of the French group have dropped by about 22 per cent so far this year amid demand worries in China as well as concerns that Trump’s tariffs will weigh on consumer spending in the US.

Competitors such as Hermes International and Cartier owner Richemont, that have been a bit more resilient, have seen their shares rise over the same period, while Gucci-owner Kering has tumbled 24 per cent.

Out of nearly 40 analysts tracked by Bloomberg who cover LVMH, only one has a sell recommendation. The average target price for its stock is 608.8 euros, which is about 20 per cent higher than its current price. BLOOMBERG