Shares of luxury giant LVMH experienced a 5.26% drop by 8:24 a.m. London time on Wednesday, following the release of its annual results that slightly surpassed expectations. Despite posting impressive revenues of 84.68 billion euros ($88.27 billion) for 2024, exceeding the 84.38 billion euros forecast by LSEG analysts, the figures highlighted only a modest organic growth of 1% compared to the previous year. Investors, eager for signs of a robust recovery in the luxury market, expressed concerns as LVMH's performance remained under scrutiny.
LVMH attributed its revenue growth primarily to strong demand within its selective retailing division, which includes the popular retailer Sephora, as well as its thriving perfume and cosmetics segments. However, the luxury conglomerate, seen as a bellwether for the wider luxury industry, faced challenges in maintaining momentum in its critical fashion and leather goods and wines and spirits categories. These declining sales hinted at ongoing pressures within the group.
The luxury sector has been navigating challenging waters in recent years, with investors closely monitoring developments for further signs of recovery. While Cartier owner Richemont reported its "highest ever" quarterly sales during the festive shopping period, LVMH's results painted a more cautious picture. The wider Asia Pacific region, particularly China, exhibited slower consumer growth, posing additional hurdles for LVMH's global operations.
LVMH, the owner of esteemed brands such as Louis Vuitton, Moët & Chandon, and Hennessy, remains a key indicator of health in the luxury industry. Its recent performance underscores the mixed signals emanating from the sector, as market players seek clearer evidence of a sustained revival.