LVMH reported a disappointing start to the year, with first-quarter sales falling below expectations as American shoppers pulled back on beauty and beverage purchases, while Chinese demand remained tepid.
The French luxury conglomerate said revenue declined 3% in the first quarter, falling short of analyst forecasts for a 2% gain for the January-March period.
The decline marks the first significant sign that luxury firms may be facing another difficult year following President Donald Trump’s recent tariff measures, which have heightened fears of a global recession.
The company's New York-listed depositary receipts tumbled as much as 7.5% following the announcement.
Finance Chief Cecile Cabanis pointed to last year’s unusually strong demand from Chinese tourists in Japan as a factor behind the sales drop. “The main swing factor is really linked to last year's Chinese demand in Japan,” she said. “We are not having the benefit of the push this year.”
In a call with analysts, Cabanis said that while the group’s high-end fashion and leather goods brands remained “well-oriented” in the United States, the performance of its more accessible products had softened. “The U.S. deceleration was essentially driven by Sephora,” she noted, adding that “Amazon.com was very aggressive on prices."
Trade tensions have added further complexity to LVMH’s outlook. “These days, parameters are changing every hour,” Cabanis remarked, highlighting the unpredictability caused by shifting global policies.
The fashion and leather goods division - which accounts for nearly half of LVMH’s total revenue and over 75% of its operating profit - posted a 5% drop in sales, missing forecasts for flat growth. While Louis Vuitton continued to outperform within the division, Dior’s recovery lags.
At the time of writing, LVMH (PA: LVMH) stock was trading at €530.1, up 1.1% from Friday's close of €524.4. LVMH's market cap stands at €261.96 billion.
