Sales at the world's biggest luxury group and owner of labels Louis Vuitton, Tiffany & Co. and Hennessy, grew to 20.98 billion euros ($22.8 billion), a 1% rise on an organic basis, which strips out currency effects and acquisitions.
That compares to a 3% rise year-on-year in the first quarter, and double-digit growth in 2023 when consumers in key market China splurged on luxury goods as they emerged from pandemic lockdowns.
The report from sector bellwether LVMH, which is Europe's second-largest listed company, worth around 340 billion euros, follows profit warnings from smaller labels Burberry (BRBY.L) and Hugo Boss (BOSSn.DE) last week.
Though LVMH sales undershot expectations for revenues of 21.6 billion euros, according to an LSEG poll based on six analysts, it was seen as largely priced in.
"All in all, this shouldn't be an insurmountable problem, given the minimal size of the miss and the significant pullback the LVMH share price has suffered since the initial post 4Q23 reporting euphoria," said Luca Solca, analyst at Bernstein.
LVMH shares have been volatile since the luxury slowdown emerged, and are down about 20% over the past year, amid worries that middle-class shoppers in the world's No. 2 economy are pulling back on purchases due to a property slump and job insecurity.
LVMH offered "no nasty surprises", said Piral Dadhania, RBC analyst.
Its sales in Asia, excluding the Japanese market, fell by 14% in the second quarter, worsening from a 6% drop in the first quarter.
Sales in Japan, where tourists are taking advantage of the weak yen, continued to grow.
LVMH CFO Jean-Jacques Guiony said that it was difficult to provide an outlook on the Chinese market, but added that "the Chinese customer is holding up quite well".
"We still see a lot of China travellers, particularly into Japan, which says something about the appetite of mainlanders for our brands, which shows no sign of fading away," Guiony told analysts on a call.
Business with U.S. and European customers is "slightly better", he added.
The surge in sales in Japan is, however, exerting significant pressure on margins, he added, with lower costs and prices compared to China.
Operating profit for the first half was 10.65 billion euros, with an operating margin of 25.6%, down from 27.4% a year ago.
That compared to expectations for 11.11 billion euros and a 26.2% margin, according to consensus provider Visible Alpha.
The group's fashion and leather goods division, which includes the Louis Vuitton and Christian Dior (DIOR.PA) brands and accounts for nearly half of group sales and the bulk of operating profit, grew 1%, slowing slightly from the previous quarter's 2% rise.
Gucci-owner Kering (PRTP.PA) reports first half results on Wednesday and Hermes (HRMS.PA) reports on Thursday.
($1 = 0.9212 euros)
