By Andrea Figueras

LVMH Moet Hennessy Louis Vuitton reported a decrease in revenue for the first quarter, missing analysts' expectations, amid what it called a geopolitical and economic environment that remains uncertain.

The French luxury conglomerate--which houses brands Dior and Louis Vuitton, among others--said Tuesday that revenue for the first three months of the year came in at 20.69 billion euros ($21.98 billion), down 2% in reported terms compared with the year-earlier period.

Analysts expected group revenue of EUR21.14 billion, according to a poll of estimates compiled by Visible Alpha.

Revenue rose 3% organically, which compares with the 17% organic increase the company reported during the same months last year, when it saw a significant rebound in Asia.

The core fashion and leather-goods division contributed EUR10.49 billion to group revenue, which compares with EUR10.73 billion in the year-prior period. This came below analysts' forecasts of EUR10.66 billion, according to Visible Alpha consensus.

As for the wines and spirits business, the company saw an organic 12% decline. The division has been under pressure as demand for high-end liquors fell in the U.S, leading to high inventory levels.

Analysts already expected a sluggish start to the year, as the luxury sector continues to grapple with a slowdown in demand.

Following years of strong results after the height of the pandemic, the industry is facing a normalization of sales growth due to inflation and high interest rates that have weighed on consumer spending.

Despite being a challenge for all players in the sector, the trend differs among companies depending on which clients they are more exposed to.

Names that cater to status-seeking consumers have been particularly hit by the slowdown, since these customers have tightened their belts more, while companies exposed to a wealthier clientele are performing better, as affluent shoppers tend to be more resilient in times of macroeconomic weakness, Barclays analysts wrote in a research note.

Sector normalization trends are now well understood by the market, but there will be a gap between the best and the worst performers, with Chinese demand being the key swing factor, Bank of America analysts said in a note to clients.

Regionally, LVMH saw strong momentum in Japan, where it achieved organic growth of 32%. However, Asia excluding Japan saw a decline of 6%. The company faced a tough comparison base in the region, since in the same period of 2023 it benefited from the lifting of sanitary restrictions in China and a rebound in international travel.

Domestic economic woes in China and a slower-than-expected recovery in the country contributed to the wider slowdown in demand for luxury goods. China--which was the world's largest luxury market before the pandemic--has been facing a prolonged downturn in the property sector as well as weak exports and consumer demand.

"We stick to our 'soft landing' scenario," Bernstein analysts wrote in a note to clients, noting that LVMH's update is a sign that this remains the most likely shape of things to come. The comparison base should become significantly easier going into the upcoming quarter and even more into the second half, ushering higher growth, Bernstein said.

The owner of jewelers Bulgari and Tiffany remains both vigilant and confident amid an uncertain environment and said it had a good start to the year.

Write to Andrea Figueras at

(END) Dow Jones Newswires

04-16-24 1307ET