The world’s number one luxury goods company, LVMH, has seen its net profit plunge by 14% in the first half of the year. The French group, which notably owns the brands Louis Vuitton, Dior and Moët & Chandon champagne, has been penalized by the decline in sales in China. A result immediately punished by the markets, with a loss of more than 5% for its share price this morning on the Paris Stock Exchange.
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After a prosperous post-Covid period, LVMH announced on Tuesday a 14% drop in its net profit in the first half, to 7.26 billion euros, ” in a climate of economic and geopolitical uncertainties ” and because of a weak Chinese market.
Bernard Arnault’s group, partner of Olympic Gamesposted a turnover of 41.5 billion euros for the first six months of the year, despite performances below expectations. Sales of fashion and leather goods, the group’s most profitable division, are down 2%, those of watches and jewelry by 5%. The champagne and wine sector is also suffering with a drop of 12%.
Chinese crisis impacts luxury market
The decline in consumption in Asia, one of the main luxury markets, explains these poor results. If the Japan resists, consumption in China slows down sharply. Hit by the real estate crisis and youth unemployment, Chinese people spend much less.
Other luxury brands, such as Hermès, Burberry and Cartier, are also affected by a drop in sales of their products in China.
While remaining vigilant in the current context, the giant LVMH is approaching the second half of the year with confidence, as sales in Europe and the United States are doing well.
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