As a long-time follower of the luxury industry, I can’t help but feel a pang of nostalgia when I see LVMH shares taking a tumble. Just 18 months ago, I remember cheering as Bernard Arnault became the world’s richest man due to LVMH’s strong performance post-COVID lockdown. But alas, the tide has turned, and now he’s back to fifth place on the list.
On Wednesday, LVMH’s stocks experienced a drop of 7%, following their announcement of a 5% decrease in third-quarter sales. This decline occurs in the face of growing concerns within the luxury sector about potential reductions in luxury expenditures due to economic pressures.
Based on a report from Business of Fashion, analysts had forecasted growth ranging from 0% to 2%, but LVMH, the company that owns Louis Vuitton, fell short of these expectations in their third-quarter results. Given LVMH’s dominant position in the luxury goods market, this underperformance may suggest a more serious problem not only for larger competitors but also for smaller players within the entire industry sector. Interestingly, the Asia Pacific region has emerged as a key concern, with sales of LVMH brands, excluding Japan, dropping by 16% there. Spending in China, in particular, has been slow this year, with numbers dipping to levels seen during the pandemic despite efforts to combat the crisis through stimulus packages.
18 months ago, CEO Bernard Arnault claimed the title of the world’s wealthiest individual, thanks to LVMH’s robust recovery following the COVID-19 lockdown. However, recent developments tell a different story. By September this year, Arnault dropped to fifth place on the wealth ranking, as a 20% decrease in LVMH stocks reduced his net worth by approximately half a billion US dollars, according to Fortune magazine.
Concerns about the company’s future are intensified by the recent developments at some of its major brands, such as the sale of Off-White and the creative alterations at Celine following Hedi Slimane’s departure during tough contract negotiations in early October. These events suggest a pessimistic trend for the industry, as brands grapple with an unpredictable future.
Stay tuned to TopMob for new developments and more business news.
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2024-10-16 18:57