A weaker-than-expected revenue report was the news item driving down LVMH Moët Hennessy — Louis Vuitton‘s (LVMUY -6.22%) American depositary shares (ADS) on Monday. The luxury goods maker saw its ADS price sag by more than 6% as a result, contrasting unfavorably with the S&P 500 index’s 0.8% increase on the day.
First-quarter flop
On Sunday, LVMH published details of its first-quarter revenue, showing that its total top line for the period was just over 20.3 billion euros ($23.1 billion). That figure was down by 3% on a year-over-year basis. It also failed to reach the consensus analyst estimate of $24.1 billion.
The slump mirrored the performance of most of the company’s divisions. Fashion and leather goods, by far its most significant in terms of revenue, was buffeted by a 5% decline from the first-quarter 2024 result, bringing in $11.5 billion.
The No. 2 category, selective retailing, fell by 1% to $4.8 billion, while watches and jewelry improved, but only marginally to under $2.8 billion.
In the very selective financial release, LVMH attributed the slides to a generally “disrupted geopolitical and economic environment.”
In a more granular remark, chief financial officer Cécile Cabanis said in a conference call, “The main swing factor is really linked to last year’s Chinese demand in Japan.” At that time, Chinese consumers were largely responsible for a pop in company sales in the nearby country, following the weakening of the yen.
A justifiable reaction
It’s discouraging that the one blip in growth for LVMH recently was largely due to a quirk related to currency movements. Times aren’t good for luxury retailers just now, with a nervous world pulling back on spending as the current global trade conflict plays out. I don’t see any potentially good drivers for LVMH on the horizon, so I don’t blame investors for selling this stock.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
