Luxury goods leader LVMUY.US (LVMUY.US)'s Q3 performance was the worst in four years, and the stock price plummeted by more than 10% at one point!

The Zhitong Finance App learned that LVMH Moët Hennessy Louis Vuitton (LVMUY.US), a leader in the global luxury goods industry, announced its third-quarter earnings results on Tuesday, facing the worst quarterly performance since the global pandemic in Q2 2020. The Group's overall sales fell 3% in Q3. Sales of fashion and leather goods fell for the first time since the pandemic. Organic revenue from key divisions of the Group's brands, including Louis Vuitton (Louis Vuitton) and Christian Dior (Christian Dior), fell 5% in the third quarter, after analysts expected a slight increase.

LVMH is run and controlled by Bernard Arnault (Bernard Arnault), one of the richest people in the world, and owns around 75 luxury brands, covering fashion, jewelry, hotels and spirits. All of the group's major businesses fell short of analysts' expectations in the third quarter.

The group is headquartered in Paris, and its American Depositary Receipts plummeted 10% intraday after earnings reports were released, then the decline narrowed and closed down 8%. American rivals such as Ralph Lauren (Ralph Lauren) and Estee Lauder (Estee Lauder), Gucci's parent company Kering Group (PPRUY.US), also dropped sharply in American depository receipts.

The decline in demand from Chinese consumers is one of the factors behind the poor performance of this financial report. Previously, it seemed that Chinese consumer demand for high-end products could not be satisfied. “Most of our markets are currently facing demand challenges, including mainland China,” LVMH Chief Financial Officer Jean-Jacques Gioni said in the quarterly report.

Pilar Dadhania (Pilar Dadhania), a capital market analyst at the Royal Bank of Canada, said in a report that the results “indicate that the economy is slowing more than expected.”

Chinese consumers have taken control of spending on expensive goods in light of concerns about slowing economic growth and the real estate market. These concerns also prompted the Chinese government to announce a package of measures to revitalize the economy last month. Gioni said it is currently difficult to assess the potential impact of such measures on demand, but “this shows that the Chinese government takes this issue very seriously.”

LVMH's organic sales in Asia, including China, fell 16% this quarter, exceeding expectations. LVMH has always been one of the most resilient groups in the face of cooling Chinese demand, and this sharp decline in performance is disappointing.

Furthermore, sales performance in the Japanese market fell short of expectations, and the strengthening of the yen hit Chinese consumer spending on luxury goods in Japan. The performance of the US and Europe was also disappointing.

Last year, the pandemic-era consumer boom that drove luxury sales lost momentum, especially some brands that cater to what they call aspiring consumers. Top brands such as Hermes International (Hermes International) have weathered the downturn well, and the company will announce quarterly sales next week.