Shares of luxury companies plummeted: LVMH reported a decline in sales in its core business segment
Luxury sector stocks fall following LVMH's earnings report / Photo: Andrei Antipov / Shutterstock
Shares of luxury giant LVMH fell 1.8% during the first hour of trading on the Paris Stock Exchange. Fashion houses Hermès and Kering, which owns the Gucci brand, lost 2.7% and 1.9%, respectively. Shares of Richemont, which owns the Cartier jewelry brand, fell 2.2% in Switzerland.
Investor sentiment is largely driven by the latest report from LVMH, the world’s largest luxury goods manufacturer. Organic revenue for the key fashion and leather goods division, which includes the Louis Vuitton brand, fell 5% in the third quarter amid a decline in consumer interest in China. The decline was worse than analysts’ forecasts: they had expected a decline, but a much smaller one—about 1.6%.
The results from the apparel and leather goods division—which analysts are closely monitoring—highlight the challenges the sector has faced, according to The Wall Street Journal. For years, this industry has relied on China’s growing middle class to drive sales of high-end handbags and clothing. The prolonged economic downturn and weak consumer sentiment in the country are weighing on spending, dashing hopes for a sustained recovery in demand following the country’s emergence from pandemic-era restrictions, the publication notes.
"These results confirm the sluggish recovery and the already fragile momentum observed at the beginning of the year," according to analysts at RBC Capital Markets.
This news story is being updated.
This article was AI-translated and verified by a human editor
