LV Sales Slide: Luxury in Decline? ($LVMUY)
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LVMH Sales Slows.
Sales growth for $LVMH-Moet Hennessy Louis Vuitton(LVMUY)$ (owner of Louis Vuitton, Tiffany, etc.) slowed to 3% in Q1 2024, on an organic basis to 20.69 billion Euros (US$22 billion), matching analyst expectations.
This came in lower than last year, 2023 when sales boomed due to China’s reopening after a super stringent Covid lockdown.
Rising prices and a global slowdown are causing some luxury shoppers to hold back on expensive purchases.
LVMH, Europe's 2nd-largest listed company (with nearly 400 billion Euros net worth) is the first luxury brand to report earnings, setting the overall tone for the luxury industry.
LVMH Q1 2024 Earnings.
Sales in Asia (excluding Japan) were down -6%, while Europe and US saw a slight increase of +2%.
Analysts at Bernstein, considered results “decent”, considering the tough comparison to last year's post-Covid “revenge” shopping.
Chinese shoppers are still key to LVMH, but their demand has softened due to a weak Chinese economy.
LVMH is optimistic about growth in the US but may encounter headwinds as American customers are turning cautious due to persistent inflation.
The luxury industry is adjusting to slower growth after a pandemic boom. Analysts expect growth rates to slow down to single digits this year, compared to double digits in recent years.
LVMH's stock price has been volatile due to concerns about slowing demand. (see above)
The luxury owner’s stock price has lost -9.53% for past 12 months.
It bottomed on 13 Oct 2023 at US$138.61 per share.
LVMH’s rival Gucci's owner Kering, already forewarned of a -10% sales drop.
Kering shares, along with UK luxury label “Burberry” have also fallen significantly by -40% and -55% respectively so far.
My viewpoints: (mine & mine only)
I wholeheartedly believe that it is “ok” to gift oneself or loved ones luxury goods to celebrate a special occasion.
To purchase “luxury” items on a regular basis is not sustainable if one were to balance the objectives of investment, retirement and live like there is no tomorrow.
To think that luxury fashion houses are increasing their prices between 5% to almost 10%, half year, just borders on being ridiculous.
The price adjustment, way above inflation of most countries show how little regards luxury firms have about their customers.
This explains the rise of the Pre-loved market for luxury goods, that is way more sustainable and honestly to me - the alternate luxury that is taking form slowly but surely.
Time for a mindset change when it comes to luxury and luxury goods ?
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