LVMH Sales Slip Shows Impact of China Weakness, Frugal Consumer

LVMH’s (LVMUY) second-quarter results, pinch tepid income disappointing investors, showed that the pullback by consumers on high-end items and cooling Chinese spending is affecting moreover nan world’s largest luxury firm.

The company, whose brands see Dior and Louis Vuitton, reported Q2 year-over-year integrated gross maturation of conscionable 1% to 20.98 cardinal euros. Sales successful Asia excluding Japan plunged 14%, though Chinese spending maturation successful Japan and Europe was "strong."

"In an uncertain geopolitical and economical environment, nan group remains assured and will support a strategy focused connected continuously enhancing nan desirability of its brands," LVMH said.

LVMH Results Drag Luxury Sector Lower

The results took a toll connected shares of LVMH, which was until precocious seen arsenic being upscale capable to flight nan deed connected luxury spending. Its shares were down 4% successful French trading, while those of its rivals besides dropped.

Trench overgarment shaper Burberry (BURBY), which past week said it expects to station an operating nonaccomplishment successful nan first half, Gucci proprietor Kering (PPRUY), and Cartier proprietor Richemont (CFRUY) were each little successful European trading. 

A slowing system successful China, which is simply a ample driver of world luxury spending, has wounded astir brands. Richemont past week reported a 27% quarterly diminution successful China, Hong Kong, and Macau sales, while French luxury group Kering reported a 21% Gucci income driblet successful nan first quarter, which were "particularly impacted by a crisp diminution successful Asia-Pacific."