Shares of LVMH drop as full-year results throw doubt on broad luxury recovery

Shares in LVMH retreated on Wednesday after slightly better-than-expected annual results from the world’s largest luxury company threw doubt over a broader recovery in the luxury sector.

The owner of brands including Louis Vuitton, Moët & Chandon and Hennessy posted revenues of 84.68 billion euros ($141.5 billion) for 2024, exceeding the 84.38 billion euros forecast by LSEG analysts and equating to organic growth of 1 per cent versus the previous year.

Investors have been looking for further confirmation of a recovery in the luxury sector after Cartier owner Richemont reported its “highest ever” quarterly sales figure over the festive shopping period.

However, declining sales in LVMH’s critical fashion and leather goods and wines and spirits segments pointed to continued pressure within the group.

“After a stellar start to the reporting season for the luxury sector, anticipation had been increasing ahead of LVMH’s Q4 results, which is seen as the proxy for the sector. However, the company reported a relatively underwhelming set of results yesterday evening,” said Mamta Valechha, consumer discretionary analyst at Quilter Cheviot.

LVMH on Tuesday attributed its revenue growth to solid demand within its selective retailing division — which includes retailer Sephora — and perfume and cosmetics.

Growth was also broadly driven by consumers in the US, Europe and Japan, while the wider Asia Pacific region — and notably China — lagged.

The French luxury goods giant is seen as a bellwether for the wider luxury industry, which has faced significant pressure over recent years amid declining China sales and broader macroeconomic headwinds.

“While LVMH saw a sequential improvement, it was less pronounced compared to Richemont and Burberry,” Quilter Cheviot’s Valechha continued. “Had LVMH been the first to report this earnings season, this set of results would have been digested well. However, peers had already set the bar high, so it is unsurprising to see its shares down this morning.”

Shares in LVMH are currently up around 14 per cent year-to-date. Earlier this month, the group surpassed Danish pharmaceutical giant Novo Nordisk to regain the title of Europe’s most valuable company.