LVMH fashion sales fall 5% as Chinese demand weakens

LVMH reported a 5% decline in third-quarter organic revenue from its fashion and leather goods division, worse than the 1.8% drop analysts expected. The owner of Louis Vuitton and Dior said on October 12 that weaker Chinese demand hurt the business despite continued strength in the United States.

The division had returned to growth in the preceding quarter for the first time in two years. Across LVMH, third-quarter organic sales increased 1% to €18.5 billion, compared with analysts' expectations for a 1.3% rise.

Regional sales showed a widening gap: revenue from Asia excluding Japan declined 5% from a year earlier, with China driving the fall. US sales grew 5%, slowing from the second quarter's 6% increase.

Chief financial officer Cecile Cabanis said changes in the economic backdrop for Chinese consumers were postponing a recovery, but she did not see a structural or company-specific obstacle to it. She also said a one-off logistics issue at Louis Vuitton had reduced growth for the quarter by around one point.

LVMH's other divisions recorded growth. Watches and jewelry revenue increased 6% from a year earlier, while Moët Hennessy's wines and spirits sales also rose 6%. Jewelry demand and selective retailing, particularly beauty retailer Sephora, supported the group's overall sales.

LVMH said Dior was seeing strong demand for new designer Jonathan Anderson's clothing and leather goods collections. Cabanis said the brand's sales were positive for the year so far.