French luxury giant LVMH (LVMH.PA) reported a 3% fall in third-quarter sales, undershooting estimates in its first decline in quarterly sales since the pandemic and offering little reassurance to investors worried about the sector's outlook.
The world's biggest luxury group posted on Tuesday 19.08 billion euros ($20.8 billion) in revenue for the three months ending in September, a 3% fall on an organic basis, stripping out the effect of currencies, acquisitions and divestitures.
The figure missed a consensus estimate of 2% organic growth cited by Barclays.
The group "badly" undershot expectations, with "misses across the board," said Luca Solca, analyst at Bernstein.
The sales report, the first of the quarter from the large luxury companies, comes after a rapid increase in prices of high end labels in recent years and as economic uncertainty dents consumer purchasing power.
The fashion and leather goods division, home to Louis Vuitton and Dior labels, reported a decline of 5%, well below consensus expectations for 4% growth, and the first decline for the business since 2020 during the height of the pandemic.
Fashion and leather goods comprise almost half of LVMH revenue and nearly three-quarters of its recurring profit.
In Asia - excluding Japan - of which the Chinese market is a dominant share, the sales decline worsened to a 16% slide from a 14% drop in the prior quarter.
Investors have grown nervous about the luxury goods sector since a post-pandemic spending spree lost momentum last year, with Chinese appetite for high end fashion a major source of concern. The country's property crisis has weighed on shoppers' confidence, and hopes that government stimulus measures could quickly reignite enthusiasm for high-end merchandise have yet to be fulfilled.
In Japan, growth sharply slowed to 20% from the previous quarter's 57% jump due to the stronger yen, LVMH said.
The results will likely be viewed negatively by the market, said Piral Dadhania, analyst with RBC, noting they indicated a "more pronounced slowdown than expected."
UBS has predicted that the third-quarter will be the worst for the sector in four years, with a 1% decline in organic sales year-on-year.
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