After a tough earnings report, LVMH fell 3.7% and brought rivals like L'Oréal and Hermès down too. The Dior and Louis Vuitton parent company pointed to weak consumer demand in China.
Wall Street analysts say stimulus measures likely won't be enough for spending in China to rebound. Luxury stocks slid Wednesday after LVMH's tough earnings report and a warning from Wall Street about the struggle to revive demand among the all-important Chinese consumers. Its shares fell 3.
7% Wednesday, while L'Oréal dipped 2.2%, and Hermès dropped 1.3%.
LVMH reported a sales dip and delivered commentary on weak demand in China, a dire sign for the luxury sector, which has relied heavily on consumers in the world's second-largest economy to drive growth. In its earnings release Tuesday, LVMH reported a sales decline of 3% year over year in the third quarter. The French luxury conglomerate's fashion and leather products fell 5%, marking their weakest results since the second quarter of 2020.
That group of products includes the famed brands Louis Vuitton and Christian Dior. The company pointed to overwhelmingly weak demand in China, with organic sales in Asia (excluding Japan) falling 16%. "Most of our markets currently face economic challenges including mainland China," LVMH's chief financial officer, Jean-Jacques Guiony, said during an earnings call, adding: "Consumer confidence in mainland China today is back in line with the all-time low reached during COVID.
" He said, though, that the.