Luxury shares tumbled on Wednesday after reported a bigger than expected fall in due to weak consumer demand in China. Shares in Paris-listed LVMH, which is controlled by French billionaire Bernard Arnault, fell as much as 7.5 per cent in early trading to their lowest level since July, 2022, before recovering some ground to close down 3.
7 per cent on the day. The owner of the Louis Vuitton and Dior brands has fallen about 18 per cent so far this year as global demand for luxury goods has softened. Other luxury stocks also lost ground, with Cartier owner Richemont falling 1.
2 per cent, Hermès down 1.6 per cent and Kering, which is in the middle of a fraught turnaround at top brand Gucci, losing 1.1 per cent.
Beauty leader L’Oréal also dropped 2.3 per cent as investors worried that the more sombre outlook for luxury goods would carry across to more affordable indulgences in skincare and cosmetics. LVMH’s third-quarter revenues miss “came from deteriorating trends from the Chinese customer whilst the other nationalities did not see much improvement,” said Carole Madjo, an analyst at Barclays.
“We believe the miss will be perceived as a negative read-across for the rest of the sector and reflects the fact that earnings downgrades in the sector are still ongoing.” Sales at LVMH’s core fashion and leather goods division fell five per cent in the third quarter year on year, missing consensus forecasts for a one per cent rise. It is the first time the unit has.
