LVMH, the world's largest luxury group, reported a 1% increase in organic sales to €18.5 billion ($20.7 billion) for the third quarter, which was below analysts' expectations of 1.3% growth. The fashion and leather goods division, which accounts for nearly half of LVMH's revenue, experienced a 5% decline in organic sales, significantly worse than the anticipated 1.8% drop.
This downturn is attributed to a 5% fall in sales in Asia, particularly due to weakened consumer sentiment in China, as noted by Chief Financial Officer Cecile Cabanis. The luxury sector, valued at $350 billion, has been struggling with a three-year slowdown, and LVMH's results may signal ongoing challenges for the industry.
The company has also faced issues such as a backlash over a copyright dispute in China and the impact of a tax crackdown on wealthy individuals. Following the trading update, LVMH's shares fell nearly 3%, reflecting investor concerns about the company's performance and the luxury market's future