LVMH Moet Hennessy Louis Vuitton SA (EPA:LVMH) (OTC:LVMUY) saw its ADRs fall more than 6% following disappointing Q1 results. The luxury giant reported a total organic sales decline of 3%, reaching EUR 20.311 billion, falling short of analyst expectations for a 2% growth.

Q1 Performance Recap

• Total Organic Sales: Declined 3% to EUR 20.311 billion, against a forecasted growth of 2%.

• Segment Performance:

• Fashion & Leather Goods: Sales decreased by 5% to EUR 10.108 billion.

• Wines & Spirits: Recorded a sales dip of 9%, with Champagne slightly down and Cognac struggling due to lesser demand in China and the U.S.

• Perfumes & Cosmetics: Organic sales fell by 1%.

• Watches & Jewelry: Sales remained steady year-over-year.

• Selective Retailing: Saw a downtrend of 1% organically.

Regional Performance Insights

• Europe: Showed growth on a constant consolidation and currency basis.

• United States: Experienced a slight decline, despite robust performance in key segments.

• Japan: Recorded a decline compared to Q1 2024, following significant growth the previous year due to Chinese consumer spending.

• Rest of Asia: Reflected trends similar to previous years.

Analysts’ Feedback

• Morgan Stanley downgraded LVMH to Equal Weight following the disappointing report.

• Forecasted a -3% organic sales growth for Q2 2025, down from a prior estimate of +2%.

• Analysts warned that such projections may indicate that the Fragrance & Luxury Goods division could see four consecutive quarters of sales contraction for the first time in over 30 years.

• Factors contributing to current market challenges include subdued demand from China and a softer global macroeconomic environment.

Market Context

LVMH’s disappointing Q1 performance aligns with the broader economic challenges affecting the luxury sector, particularly the decline in demand from key markets like China, impacting future sales outlook.

Conclusion

As LVMH adapts to changing market dynamics, investors should closely monitor company performance amidst shifting economic conditions.