LVMH, the world’s largest luxury group, said today sales fell 3% over the first quarter, missing expectations and confirming a sector slowdown as shoppers held back on purchases of designer goods in a choppy economic environment.
The decline in first-quarter sales, after 1% growth in the fourth quarter and analyst expectations for 2% growth in January to March, sent LVMH depositary receipts traded in the US down 7.5%.
The French company behind high-end labels including fashion houses Louis Vuitton and Dior, jewellery brand Bulgari and Hennessy cognac, has had a “difficult start” to the year, said Bernstein analysts.
Europe’s luxury players were counting on wealthy Americans to reignite growth for the sector at the start of this year as the outlook for China, another crucial market, remained bleak.
But with fears of a US recession on the rise after President Donald Trump’s recent tariff announcements sent stock markets and the dollar plunging, the sector is bracing for what could be its longest slump in years.
The fashion and leather goods division, home to Louis Vuitton and Dior and accounting for nearly half of group sales and over three quarters of operating profit, posted a 5% fall in sales, well below expectations for a flat performance.
Dior appeared to be the biggest drag on the unit, Bernstein said in a note to clients, with changes in creative direction being “slow to appear”.
Sales in the US market fell 3% in the first quarter, while in the Asia region, excluding Japan, they were down 11%. Total group sales for the three months to the end of March came to 20.3 billion euros.
The luxury sector, selling prized items to rich shoppers at high margins, is better positioned than other industries to use its pricing power to shield profits against Trump’s tariffs, which would include a 20% charge on European fashion and leather goods and 31% for Swiss-produced watches if fully applied.
Last week, Trump paused most of his tariffs for 90 days, setting a general 10% duty rate instead.
“In a disrupted geopolitical and economic environment, LVMH remains both vigilant and confident at the start of the year,” the company said in a statement.
Sales at LVMH’s wines and spirits division, home to Krug champagne and Hennessy cognac, were down 9%, as the division faces headwinds in two key markets, the US and China.
