LVMH net profit down 14% in first half

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Dive summary:

• LVMH Mot Hennessy Louis Vuitton reported a 14% drop in net profit to 7.3 billion euros, or approximately $7.9 billion in the first half of 2024, compared to $8.5 billion year-over-year, according to an earnings release released Tuesday.
• Revenue for the quarter fell 1%, with fashion and leather goods down 2% and watches and jewelry down 5%. The company said it was subject to a significant negative impact from currency fluctuations, particularly in fashion and leather goods. Current operating income fell 6% in fashion and leather goods and 19% in watches and jewelry.
• The company's most significant declines continued to be in its Wines and Spirits division, which reported a 12% decline in revenue and a 26% decline in recurring operating profit in the first half, reflecting the continued normalization of demand that began in 2023, the statement said. Against Sales of Champagne & Chandon and Hennessy cognac have started to decline since their peak during the pandemic.

Dive Overview:

THE China's luxury sector slows down has impacted the profits of several fashion industry giants in recent months. In Richemont's first quarter, 19% drop in sales in the Asia-Pacific region was driven by a 27% drop from China, while Burberry's comparable sales fell 23% in the first quarter in the Asia-Pacific region as a whole and 21% in China.

During a conference call on the results of the first quarter of AprilRodolphe Ozun, LVMH's chief financial officer, said Japan was one of the fastest-growing destinations for Chinese tourists and, as a result, spending there was having a negative impact on revenues from Asia ex-Japan.

The trend has not abated, and the company said in its first-half results on Tuesday that Japan saw double-digit revenue growth, but the rest of Asia reflected strong growth in spending by Chinese customers in Europe and Japan.

The first-half results reflect LVMH's remarkable resilience, driven by the strength of its Maisons and the responsiveness of its teams in a climate of economic and geopolitical uncertainty, said Bernard Arnault, Chairman and CEO of LVMH, in the press release.

Arnault highlighted LVMH's partnership with the upcoming Paris 2024 Olympic and Paralympic Games. He said the company was honored to share its creativity, excellent craftsmanship and deep commitment to society to make this event a resounding success and an opportunity for France to shine on the world stage.

LVMH-owned watch and jewelry brand Chaumet recently unveiled the medals for the Paris 2024 Olympic and Paralympic Games, according to the statement, and Trunks designed by Louis Vuitton to house the medals and torches.

While remaining vigilant in the current context, the Group is approaching the second half of the year with confidence, and will count on the agility and talent of its teams to further strengthen its position as world leader in luxury in 2024, Arnault said in the press release.

The company remains confident despite an uncertain geopolitical and economic environment. LVMH said it plans to continue to focus on continuously improving the desirability of its brands and the exceptional quality of its products and its excellence in distribution.

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