LVMH's shares took a dive, falling by 7% on Wednesday as the luxury conglomerate reported third-quarter sales down 5%. The decline arrives amidst ongoing industry anxieties about a slowdown in luxury spending due to economic headwinds.
According to Business of Fashion, analysts predicted growth within 0% to 2%, but the Louis Vuitton owner's third-quarter report signals a big miss. Arguably the most powerful player in the luxury goods industry, the company's shortcomings may signal a deeper crisis for competitors and smaller players across the entire sector. The Asia Pacific market is front-and-center as LVMH brand sales in the region, excluding Japan, fell by 16%. Chinese spending has been particularly slow this year, with numbers declining to pandemic levels despite attempts to quell the crisis with stimulus packages.
No more than 18 months ago CEO Bernard Arnault became the world's richest man due to LVMH's strong performance post-COVID lockdown, a stark contrast from the most recent news. By late September this year Arnault plunged to fifth place on the list as LVMH stocks fell by about 20%, cutting his net worth by half a billion US dollars, according to Fortune.
Worries about the future of the company are compounded by shake-ups at some of its biggest brands including the recent sale of Off-White and creative changes at Celine, where Hedi Slimane left amidst thorny contract negotiations in early October. The downturn signals a negative outlook for the wider industry as brands continue to navigate a largely uncertain future.
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