LVMH Reports Strong Sales Growth Amid Improving Luxury Market Conditions
LVMH reported a 1 per cent increase in fourth quarter sales, defying expectations, supported by a strong US economy and European resilience, while facing a decline in annual operating income.
LVMH defied expectations and raised sales in its most recent quarter thanks to a buoyant US economy and resilience in Europe, raising optimism that the worst of the downturn in the luxury goods market has passed.
LVMH, the sector bellwether, is the latest luxury group to outperform expectations in the quarter ending December 31, after positive surprises from Cartier-owner Richemont and Burberry sent industry shares higher.
This follows a tough rest of 2024, as the industry contended with a sharp slowdown in luxury sales and a stubbornly downbeat previously buoyant Chinese market.
The Paris-based company, controlled by French billionaire Bernard Arnault, said on Tuesday that fourth quarter sales rose 1 per cent on an organic basis to €23.9bn, above analyst expectations for a 1.25 per cent fall, according to estimates compiled by Visible Alpha.
"This year has been roughly stable," chief financial officer Jean-Jacques Guiony told the Financial Times, adding that performance had been "objectively better in Europe and the US" in the fourth quarter.
"It's not great, but it's also not a catastrophe compared to some commentaries," he said.
Full-year revenues came in above expectations to grow 1 per cent year on year on an organic basis to €84.7bn, compared with Visible Alpha consensus expectations that they would be flat.
However, full-year operating income fell for the first time since 2020 -- down 14 per cent year on year on an organic basis to €19.6bn -- as slower growth, increased costs and minimal price rises on products put some pressure on margins.
Sales at LVMH's core fashion and leather goods division, which contains top brands Louis Vuitton and Dior, also came in above expectations, declining 1 per cent to €11.1bn in the fourth quarter compared with Visible Alpha expectations for a 3 per cent decline.
Guiony leaves the role on February 1 after two decades as group finance chief to take the helm of drinks business Moët Hennessy.
