LVMH Q3 2024 Earnings: What They Actually Said

Published: October 15, 2024
Company: LVMH Moët Hennessy Louis Vuitton (MC.PA / LVMUY)
Quarter: Q3 2024 (July - September 2024)

The 30-Second Version

The luxury party is over. LVMH, the world's largest luxury company, just reported its first quarterly revenue decline since the pandemic. Revenue was €19.08 billion, down 3% organically and missing analyst expectations by a wide margin. The Fashion & Leather Goods division, which houses Louis Vuitton and Dior, fell 5%. Asia (excluding Japan) crashed 16%. CFO Jean-Jacques Guiony dropped this bomb: Chinese consumer confidence is "back in line with the all-time low reached during Covid." The stock fell 10% after earnings. This isn't just an LVMH problem. It's a signal that the Chinese luxury consumer has pulled back hard.

The Numbers

Metric	Actual	Expected	Result
Revenue	€19.08B	€20.01B	❌ Miss 5%
Organic Growth	-3%	+2%	❌ Miss
Fashion & Leather Goods	-5%	+1%	❌ Miss badly
Asia (ex-Japan)	-16%	—	❌ Collapse

This was an ugly miss across the board. Analysts expected low single-digit growth. Instead they got a decline. The Fashion & Leather Goods segment, LVMH's most important division, swung from expected slight growth to a 5% decline.

What's Actually Happening

China: The Dam Has Broken

The numbers tell the story: Asia (excluding Japan) revenue fell 16% year over year. But even that understates what happened. CFO Guiony specifically called out a "marked deterioration" in sales of fashion and leather goods to Chinese consumers.

His most alarming quote: "Consumer confidence in mainland China today is back in line with the all-time low reached during Covid."

What's going on? Multiple factors are hitting at once:

Property market crisis crushing household wealth
Youth unemployment remains elevated
Government stimulus focused on infrastructure, not consumption
Cultural shift toward "quiet luxury" and saving

Chinese consumers haven't stopped spending entirely. They're just traveling to spend. Sales to Chinese tourists in Europe and Japan were strong. But that's cold comfort because tourist spending is less predictable than local retail.

Japan: Growth Fading

Japan had been LVMH's bright spot for the past year, with tourists flooding in to take advantage of the weak yen. But that tailwind is fading. The yen strengthened in Q3, making Japan shopping less attractive. Q3 growth slowed notably compared to earlier quarters.

Fashion & Leather Goods: Weakness Across the Board

This is LVMH's crown jewel division, home to Louis Vuitton, Dior, Celine, Loewe, Fendi, and Givenchy. It's also where the problems are worst.

The -5% decline was the steepest miss versus expectations of any segment. Management offered limited insight but noted that Louis Vuitton performed "slightly above" the division average while Dior was "slightly below."

There's also creative turmoil happening:

Hedi Slimane left Celine (Michael Rider replacing)
Kim Jones left Fendi (no successor named yet)
Sarah Burton joining Givenchy

New creative directors take time to develop collections. Expect continued choppiness in the coming quarters.

Wines & Spirits: Cognac Pain

The cognac business got hit by China's imposition of temporary anti-dumping measures on French brandy. This is partly a trade dispute response to EU tariffs on Chinese electric vehicles. The business impact: Guiony noted it would affect profits going forward.

Champagne was also weak as consumers pulled back on celebration spending.

The Big Question

Is this a cyclical downturn or something worse?

LVMH's position: This is cyclical. Chinese consumers will come back. The fundamental desire for luxury goods hasn't changed. As CFO Guiony put it, they're counting on product innovation to emerge from the slump.

The bull case: Luxury has survived downturns before. LVMH brands are iconic and irreplaceable. China's economy will eventually stabilize. When it does, pent-up demand will drive recovery.

The bear case: Maybe luxury peaked. The post-Covid revenge spending is over. Chinese consumers are permanently more cautious. "Quiet luxury" means less logo-heavy LV and Dior spending. The industry needs to right-size expectations.

The honest answer: Nobody knows. China has been the luxury industry's growth engine for over a decade. If Chinese consumers permanently shift behavior, it's a much bigger problem than a cyclical downturn. But it's too early to know which scenario plays out.

What Management Said

"Consumer confidence in mainland China today is back in line with the all-time low reached during Covid." — Jean-Jacques Guiony, CFO

This is the most alarming quote from any luxury executive this quarter. Covid all-time low means when stores were literally closed for months. That's the comparison point for current consumer sentiment.

"In an uncertain economic and geopolitical environment, the Group remains confident." — LVMH press release

Standard corporate boilerplate. They have to say this. What matters is what they're actually doing, which is hunkering down and waiting.

"Our future customers should feel drawn to our products because of their perception of the excellence of our craftspeople, and not because we're trying to reel them in with some classic marketing tactic." — Bernard Arnault, Chairman & CEO (at an event the prior week)

Arnault is drawing a line. LVMH won't discount. They won't chase aspirational customers with cheaper products. If demand weakens, they'll wait it out. This is the luxury playbook: protect the brand at all costs, even if it means short-term pain.

"We haven't, or almost haven't, increased prices last year, so we couldn't offset in gross margin the increase in the price of labor." — Jean-Jacques Guiony (on profit margins)

They held prices steady to protect demand, but that meant absorbing higher labor costs. Margins got squeezed. It's a trade-off: you can protect volume or protect margin, but in a downturn you can't always do both.

Jargon, Explained

Organic Growth: Revenue growth excluding currency effects and acquisitions. This shows how the underlying business is actually performing. When LVMH reports -3% organic growth, it means actual sales at existing stores fell 3% after adjusting for currency swings.

Fashion & Leather Goods: LVMH's largest division, representing about 50% of profit. Includes Louis Vuitton (by far the largest), Christian Dior, Celine, Loewe, Fendi, Givenchy, Marc Jacobs, and others. When this division struggles, the whole company feels it.

Greater China / Asia ex-Japan: Industry terminology for mainland China, Hong Kong, Macau, and Taiwan combined. LVMH and other luxury companies track this separately from Japan because the customer bases behave differently.

Aspirational Customers: Industry term for people who stretch to buy luxury goods but aren't truly wealthy. They might save up for an entry-level LV bag. In downturns, aspirational customers pull back first, which is why entry-level luxury products often suffer more than ultra-high-end.

Creative Director Churn: When designers leave fashion houses. This matters because collections take 12-18 months to develop, so a new designer's vision won't appear in stores for over a year. During the transition, sales often soften.

What's Next?

LVMH doesn't provide formal guidance, but here's what to watch:

Near-term headwinds:

French government plans to raise corporate tax (could cost €700-800 million)
Cognac tariffs from China continuing
Poor Champagne harvest (€40-50 million profit impact)
No creative momentum yet from new designers

Potential catalysts:

China economic stimulus (if it actually targets consumption)
Yen weakness resuming (would help Japan sales)
New collections from incoming creative directors (late 2025)
Holiday season spending in Western markets

Key Dates:

January 2025: Full year 2024 results and Q4 update
Q1 2025: First read on whether China stabilizes

LVMH in Context: The Luxury Landscape

LVMH's results are being watched as a bellwether for the entire luxury industry. Here's how others are faring:

Struggling:

Kering (Gucci parent): Even worse declines, major brand repositioning underway
Burberry: Deep restructuring, brand repositioning

Holding up better:

Hermès: More resilient (ultra-high-end customer base less affected)
Richemont (Cartier parent): Jewelry division resilient

The pattern: Ultra-high-end luxury is holding up better than "accessible luxury." This supports the theory that aspirational customers are pulling back more than truly wealthy ones.

The Bottom Line

This was a wake-up call. LVMH, the dominant player in luxury, just reported its first revenue decline since Covid. China, which powered the luxury boom for years, is in consumer confidence free-fall.

The company says it's not changing strategy. No discounting. No chasing aspirational customers. They'll wait for demand to recover. That's a very LVMH approach, but it means investors need to be patient too.

For the broader luxury industry, the message is clear: the post-Covid boom is over. Chinese consumers, who represented 35-40% of global luxury spending in recent years, are pulling back. Until that changes, the sector faces headwinds.

Whether this is a buying opportunity or the start of a longer decline depends entirely on whether China's consumer confidence recovers. LVMH has navigated downturns before. But they've never faced a China slowdown quite like this one.

This summary is for educational purposes and is not financial advice. Data sourced from LVMH's Q3 2024 revenue release and analyst webcast.

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