LVMH’s fashion division slips 5 per cent

LVMH is typically a bellwether for the luxury industry. Kering and Hermès are to report their Q3 earnings on 23 and 24 October, respectively, while Richemont is to report its fiscal first half on 8 November. Ferragamo reported sales down 7.2 per cent, declining 9.8 per cent in the first nine months of its fiscal 2024. “We see LVMH as the weakest among the quality names (Richemont we believe will be better, Hermès will be best), hence we would recommend investors to buy in steps at the lower end of the trading range,” Solca wrote.

By division, selective retailing, which includes beauty retailer Sephora, luxury travel retailer DFS and Paris department store Le Bon Marché, was up 2 per cent, perfumes and cosmetics were up 3 per cent and watches and jewellery were down 4 per cent. By region, Asia (excluding Japan) was down 16 per cent, the US was flat, Europe was up 2 per cent and Japan was up 20 per cent year-on-year.

Guiony dismissed any causal link between the current global luxury slowdown and the price increases implemented over the years: “There are not that many products that we sell today that were active in 2019. We have changed a lot of the product range. So price comparison is not that easy. And when it comes to increasing prices, actually it’s more a mix impact than a price impact. Secondly, all the players have done the same. Do you really think that if we had not increased prices the way we’ve done, we would be faring double digits today? I don’t think so […] So we are not necessarily having the view that we should change strategies [or] the offer drastically, to address the current situation.”

The current downturn is cyclical, he insisted. “We are still very strong believers in the future of luxury, in the future of the emergence of the upper middle class in China and elsewhere,” Guiony said. “And we see absolutely no reason why after a cyclical downturn, as we are experiencing today, we shall not be in a position to recover.”

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