LVMH, parent company of Louis Vuitton, Dior, and many many more top brands, announced 2023 Q3 and first nine month results and they were up, though not spectacularly so. As the first luxury company to report results, LVMH is often the first indicator of the condition and trends facing the luxury goods market. By this metric, expect slower growth. And not surprisingly, LVMH stock prices and that of other luxury companies declined.
LVMH reported 2023 Q3 organic revenue growth of 9% over that period in 2022. For the first nine months it was up 14% (10% on a reported basis). This is three percentage points lower than growth for the first half of the year.
LVMH’s Chief Financial Officer Jean-Jacques Guiony told analysts “After three roaring years, and outstanding years, growth is converging toward numbers that are more in line with historical average.” Consider it “more normalized growth” as he posited regarding Louis Vuitton and Dior.
When asked about the “aspirational customer” he had discussed at the first half 2023 presentation, it was “more or less the same thing.” In the United States, there continues to be pressure on the aspirational consumer.
In terms of business groups, the Fashion & Leather Goods remains the largest, representing nearly half of LVMH revenues. It’s the home of so many favorite Maisons. Beyond Louis Vuitton and Dior, it includes Celine, Fendi, Loewe, Loro Piana, and Rimowa.
LVMH does not report by brand or specific product (e.g. handbags). Indeed, Guiony repeatedly declined to provide brand-specific data. Perhaps interestingly, however, LVMH highlighted Louis Vuitton’s new GO-14 Malletage handbag as a reason for success. Could this be the brand’s next classic?
Over the nine month period, organic revenue rose 16% (11% on a reported basis due to currency factors). Digging deeper though, it is apparent the growth rate has slowed. For the first half of 2023, this group’s organic revenue growth was 20% over 2022; in Q3 it was 9%.
The Selective Retailing group, which houses Sephora, DFS, and Bon Marché, saw the greatest growth, up 26% for the nine months on an organic basis. However, it represents only about 20% of LVMH revenues.
Perfumes & Cosmetics and Watches & Jewelry experienced organic revenue growth of 12% (8% reported) and 9% (5% reported), respectively. Wines & Spirits, however, saw revenue decline, continuation of a trend seen in the first half of 2023. LVMH pointed to the high comparison basis – strong 2022 numbers.
Asia (not including Japan) remains LVMH’s largest market, continuing to represent 32% of LVMH’s overall revenues. The United States now accounts for 24% of the sales, down 2% from the first nine months of 2022. Europe (excluding France) remains consistent at 16%, Japan at 7%, and France up 1% to 8%.
Geographically, LVMH reported double digit growth over the first nine months of 2023 in Europe, Japan, and the rest of Asia. Looking more carefully, however, Q3 growth was slower in China than it had been earlier in the year (e.g. 34% in Q2). Similarly, Europe’s Q3 growth was only 7% over 2022, while in Q2 it was 19%.
As for predictions about the remainder of 2023 or 2024, there was not much information beyond LVMH’s press release:
In an uncertain economic and geopolitical environment, the Group is confident in the continuation of its growth and will maintain a strategy focused on continuously enhancing the desirability of its brands, drawing on the authenticity and quality of its products, excellence in distribution and agile organization.
Of course, it will be interesting to see the results of other luxury brands like Hermès and Kering. They report later this month. It may (or may not) indicate an overall shift in the high end market.
Perhaps, though, the better indicator is the PurseBop community. What are you purchasing or planning to buy? Tell us whether you are slowing down, shifting brands, or something else.
Updated: October 11th, 2023