Actress Liu Yifei attended the Louis Vuitton Cruise 2025 show at Park Guell in Barcelona. Cruise in 2025.
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LVMH’s third-quarter sales show a piece of the luxury brand group’s armor. On October 15, the company announced that its Fashion and Leather Products division’s sales fell by 5% to €9.15 billion, while Group sales fell by 3% to €19.08 billion.
Chief Financial Officer Jean-Jacques Guiony said on an earnings call that the segment’s European and American performance improved slightly, but “the Chinese and Japanese performance deteriorated.” Given LVMH’s status as an industry bellwether, this is especially true for the group that owns brands such as Louis Vuitton, Dior and Loewe, as well as Rihanna’s Fenty Beauty, which has expanded its retail presence in China. is appropriate.
Typically counter-cyclical luxury brands (and LVMH) have shown incredible resistance in recent years, especially in China. That’s no longer the case. Louis Udall, Greater China managing partner at luxury goods consultancy MAD, believes financial analysts tend to misunderstand China’s recovery trajectory post-COVID-19 strategy.
“China completely locked down the country early in the pandemic, with consumers only shopping within its borders,” he wrote in a note. Udall, who lives in Shanghai, emphasized the importance of looking at the big picture. In the fourth quarter of 2024, the number of travelers recovered to approximately 80% of 2019 levels. This has led some people to return to their pre-pandemic shopping habits.
He added: “Chinese consumers are traveling and shopping overseas again. It’s important to not just look at year-over-year growth, but actually compare pre-coronavirus to now.”
Minghao Xu will attend the Louis Vuitton Pre-Fall 24 show in Shanghai in April 2024
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China’s continuing economic headwinds (housing crisis, high youth employment, struggling middle class) are clearly dampening consumer confidence. The latest edition of Shanghai Fashion Week (SHFW) is more subdued, with a visit to the city’s shopping malls, department stores and select shops finding them noticeably empty overall. This is not due to a significant lack of interest in fashion or the products themselves, industry insiders said, but simply a desire for “more meaningful and stylish interaction with brands.”
Against this backdrop, local retailer Dongliang launched an impressive multi-million dollar luxury store during fashion week. Housed in a luxuriously renovated historic villa in the Changning district, Maison Donliang caters to the city’s affluent class with international brands such as The Row, Lemaire and Maison Margiela spread across three floors and 700 square meters. .
Some people think that this negative feeling is just temporary. At the glitzy opening of Dongliang, a luxury goods consultant confidently announced that China’s preference for luxury goods will return in the third quarter of 2025. Investment firm Jefferies expects a healthy acceleration in Chinese consumer demand next year.
Chief Financial Officer Guiony said the decline was a “cyclical downturn.” In the call, he said the group remains hopeful that China (as elsewhere) will see an upper middle class emerge in the future. This year saw a strong showing in front-line cities, including immersive activities such as the “Role de Dior” exhibition at Beijing’s Guardian Art Center and Louis Vuitton’s “Voyager” show in Shanghai. It maintains the same.
Kering and Hermès are scheduled to report their third-quarter results on October 23 and 24, respectively, and Richemont is scheduled to submit its first-half results in November, which will provide more clarity on the current situation.
For Udall, LVMH’s gains signal the end of China’s double-digit growth, but added: “Consumers will still spend, even if they are spending less and more cautiously.”
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