LVMH Shares Slide After Weak Q1 Revenue Miss
LVMH Moët Hennessy Louis Vuitton SE (EPA:LVMH) saw its shares fall more than 2% on Tuesday after reporting first-quarter revenue below expectations. The world’s largest luxury group faced pressure from the ongoing Middle East conflict, which weighed on key segments such as fashion and beauty, despite strength in watches and spirits.
Revenue Growth Falls Short of Expectations
The Paris-listed company reported organic revenue growth of just 1% for the first quarter, missing analyst forecasts of 1.95%. Total revenue came in at €19.1 billion, below the expected €19.6 billion, highlighting softer-than-anticipated demand across several divisions.
Core Fashion Division Under Pressure
Fashion & Leather Goods, LVMH’s largest and most profitable segment, declined by 2% organically to €9.25 billion. This result fell short of expectations, which had anticipated relatively stable performance.
The company noted that the Middle East conflict reduced overall group growth by approximately 1 percentage point, with demand weakening significantly in March.
Regional Trends and Consumer Behavior
According to CFO Jean-Jacques Guiony, demand trends in the United States remained relatively stable, with no clear disruption linked to the conflict. European consumers also showed resilience, although broader regional performance remained mixed.
Watches and Spirits Provide Bright Spots
Watches & Jewelry stood out with strong organic growth of 7%, outperforming expectations of 4.2%, driven by high demand for Tiffany’s HardWear collection.
Meanwhile, Wines & Spirits posted a 5% increase, exceeding expectations for a slight decline, supported by seasonal factors such as the Chinese New Year.
Geographic Performance Mixed Across Markets
Performance varied by region. Asia excluding Japan delivered strong growth of 7%, surpassing forecasts, while the U.S. market saw modest growth of 3%.
Europe, however, lagged behind with a 3% decline, performing worse than analysts had expected.
Beauty and Retail Segments Show Weakness
Perfumes & Cosmetics remained flat, missing expectations for nearly 2% growth, although Dior showed strength in certain product categories, including foundations and women’s fragrances.
Selective Retailing grew 4%, below the 6.2% consensus. Sephora delivered solid performance across most markets, but DFS continued to weigh on results due to restructuring and reduced exposure in China and U.S. airport locations.
China Recovery Signals Improvement
Sephora showed sequential improvement in China, marking its strongest quarterly performance since 2023. However, overall market conditions in the region remained challenging.
Outlook: Cautious but Confident
Jefferies analysts, who maintain a “hold” rating on LVMH with a €510 price target, highlighted the Middle East conflict as a significant headwind, particularly for divisions exposed to tourism.
Management pointed to makeup and fragrance as key near-term growth areas, emphasizing a cautious yet optimistic outlook for the remainder of the year.
