LVMH Q3 revenue rises 9%, slowing from post-pandemic frenzy

PARIS, Oct 10 (Reuters) – Luxurious items bellwether LVMH (LVMH.PA) reported a 9% rise in third quarter revenue on Tuesday, marking slower progress as a robust wave of post-pandemic spending eases attributable to rising inflation and financial turbulence.

“After three roaring years, and excellent years, progress is converging towards numbers which are extra in keeping with historic common”, LVMH chief monetary officer Jean-Jacques Guiony instructed analysts.

LVMH, which owns labels together with Louis Vuitton, Dior, Tiffany and Bulgari, mentioned revenue got here to 19.96 billion euros ($21.16 billion), up 9% year-on-year, stripping out the impact of foreign money fluctuations and acquisitions. Complete revenue rose 1% year-on-year.

The style and leather-based items division, house to Louis Vuitton and Dior, recorded gross sales progress of 9%, in comparison with analysts’ expectations for 10% progress.

LVMH is dealing with slowing demand for top finish items in the USA and Europe, the place rising costs have prompted consumers — particularly youthful generations — to tug again from a post-pandemic spending euphoria, whereas the restoration in China has been uneven.

Guiony famous that whereas enterprise slowed in Europe over the quarter, there was not a marked change in demand for vogue and leather-based items from China in comparison with two years in the past, besides that extra purchases are being made outdoors of the mainland as journey resumes.

In the USA, there was little change in developments, based on Guiony.

The wines and spirits division posted a 14% revenue decline over the quarter, with the corporate flagging much less demand for Champagne over the interval, whereas the weak financial setting within the U.S., and a slower-than-expected bounce again in China affected demand for Hennessy cognac.

LVMH is the primary main world luxurious agency to report earnings this quarter and offers traders an perception into what to anticipate from rivals. Hermes and Kering report on Oct. 24.

“This appears adequate to help the share worth, as buyside expectations have been presumably extra muted, as the numerous market derating suggests,” mentioned Luca Solca, analyst with Bernstein, noting the corporate confronted a more durable comparability interval following robust performances in China, the USA and Europe a 12 months in the past.

Buyers have not too long ago lowered their expectations for the luxurious sector and round 96 billion euros has been knocked off the worth of LVMH since April.

The French luxurious group was final month unseated as Europe’s most dear listed firm after a 2-1/2 12 months lengthy reign by Danish drugmaker Novo Nordisk (NOVOb.CO) NOVOb.CO, which was boosted by the expansion of anti-obesity drug Wegovy.

A stronger euro in opposition to the U.S. greenback than a 12 months earlier additionally impacted the corporate as U.S. gross sales have been price much less when transformed again into its house foreign money. The damaging foreign money impression was worse than anticipated, mentioned Guiony, noting he anticipated it to negatively have an effect on margins within the second half, though a few of that will be offset by hedging methods.

The foreign money impression is anticipated to have an effect on European corporations with giant U.S. operations this earnings season.

($1 = 0.9433 euros)

Reporting by Mimosa Spencer
Enhancing by Ingrid Melander and Josie Kao

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