LVMH numbers fail to impress, shares fall
By Abigail Townsend
Date: Wednesday 29 Jan 2025
(Sharecast News) - Shares in LVMH came under pressure on Wednesday, after end-of-year results from the luxury goods bellwether failed to sparkle, despite beating expectations.
The French owner of Dom Perignon and Tiffany & Co posted a 1% uptick in revenues in 2024 to €84.7bn. Analysts had been expecting flat revenues.
Fourth-quarter sales were also better than expected. They rose 1% to €23.9bn, ahead of forecasts for a 1.25% decline.
Its core fashion and leather goods division, meanwhile - which includes Christian Dior, Louis Vuitton, Givenchy and Marc Jacobs - reported a 1% fall in sales to €11.1bn in the fourth quarter, better than the 3% decline that had been pencilled in.
The luxury sector has come under significant pressure this year, faced with higher costs and weaker consumer demand across Europe, China and the US.
Most companies, however, ended 2024 on a stronger note, raising hopes that the sector is turning a corner.
Earlier this month, shares in Cartier-owner Richemont soared after its third-quarter numbers smashed expectations, while Burberry's stock put on 15% last week following a strong festive update.
However, some investors had been hoping for a stronger showing from LVMH, which is seen as the sector's bellwether.
Full-year operating income also fell 14% to €19.6bn on an organic basis, the first time it has fallen since 2020.
As at 0945 GMT, shares in LVMH - which is controlled by its billionaire chief executive Bernard Arnault - were trading 6% lower in Paris.
Arnault said: "In 2024, amid an uncertain environment, LVMH showed strong resilience. This capacity to whether the storm in highly turbulent times...is yet another testament to the strength and relevance of our strategy.
"While remaining higher vigilant with regard to cost management and our single-minded focus on the desirability of our designs, we enter 2025 with confidence."
Chief financial officer Jean-Jacques Guiony told the Financial Times that the fourth quarter had been "objectively better in Europe and the US".
He continued: "We're in a 'wait and see' mode, because the US economy is good but our performance is linked to inflation, to interest rates and to regaining confidence...from aspirational customers who were under pressure earlier in the year."
In a note, Jefferies, which has a 'hold' rating on the stock, said: "By virtue of its sheer size, LVMH's fortunes in the months ahead should remain strongly correlated to industry trends.
"The overall uncertainty about consumers' willingness to spend at the higher price points in the US and Europe, and the extent to which the less affluent Chinese consumer will rebound, will be critical.
"It is perhaps easier to conclude that the equity may be offering attractive value for its long-term prospects."
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