Moët Hennessy results offer mixed picture

The wines and spirits division of LVMH remained among the French giant’s worst performers in the first three quarters of this year, though there were some silver linings. Ron Emler reports.

Organic sales at Moët Hennessy were 8% lower in organic terms or 11% down at €4.913 billion on an absolute measure compared with 2023.

Sales of Champagne were again weak, reflecting what the group called the “ongoing normalisation of post-Covid demand” and Cognac continued to suffer, especially in China. The US market for Cognac, however, returned to growth in the second quarter.

Rivals have heavily criticised LVMH for discounting stocks of Hennessy in America, where overall demand for the spirit appears to be on a continuing downwards curve.

The trend for LVMH was discouraging in the third quarter with organic sales 3% lower, the first drop since the pandemic and undershooting analysts’ estimates.

Concerningly for the group, sales in China, now the global engine of luxury goods growth, were sluggish.

Chief finance officer Jean-Jacques Guiony said demand in the People’s Republic had slumped to the all-time lows of the Covid era.

Notably the market in Japan was also depressed which gave investors more cause for concern as many wealthy Chinese travel there to buy luxury goods at discounted price.

Guiony said LVMH remained confident of long-term growth in Asia, especially China.

However, prospects for Moet Hennessy are heavily threatened by the likely impact of Beijing’s penalty tarrifs on Cognac while investors remain unconvinced about the effectiveness of the big package of fiscal stimulus recently launched in a bid to boost the world’s second largest economy.

LVMH’s shares fell on its results, bringing their decline to almost 5% over the past week.

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