Arnault eyes recovery as LVMH weathers 2024 challenges

Bernard Arnault, the chairman and chief executive of LVMH, will be hoping that the many “Bonne Annee” greetings he will have received this week herald a better year for the world’s leading luxury goods group than it enjoyed in 2024.

LVMH’s shares have slid by 13% in the past 12 months and Arnault (pictured), who controls the giant group through a series of holding companies and trusts, saw some US$32 billion wiped from his personal wealth.

Not that he will worry too much about where the next meal at the LVMH-owned Chez L’Ami Louis restaurant will come from or whether he can afford to accompany it with a vintage Cheval Blanc and round it off with a choice glass of Chateau d’Yquem; Arnault remains one of the world’s richest people with assets of about US$180 billion.

But despite LVMH products being centre stage as a prime supporter of the Paris Olympics and the company being lauded for its €1 billion-plus contribution to the restoration of Notre Dame as a French cultural icon, 2024 will be a year Arnault may care to forget.

LVMH sales were flat at the organic level in the first nine months of the year, hurt by weakness in China, its most important market. Overall group net sales fell by 2% compared with the first nine months of 2023.

Cognac dip

The Moet Hennessy wines and spirits division turned in the weakest performance, with revenues falling by 11%, hit especially by slumping demand for Cognac in both China and the US where the company resorted to widespread discounting to shift stocks of the spirit.

Towards the end of the year, Arnault announced a management reshuffle which saw former group chief financial officer Jean-Jacques Guiony move to head Moet Hennessy and shake it up while his son Alexandre Arnault becomes deputy CEO,  moving into wines and spirits after working at LVMH-owned jewellery brand Tiffany.

Cautious optimism

Analysts believe that the worst could be over for LVMH because stands to benefit from a revival in demand for luxury goods from the all-important Chinese market and also in the US where it outguns its rivals.

On the other hand, a threat of tariff sanctions continues to hover over Cognac from both Beijing and the incoming Trump Administration.

Despite that, some analysts tip LVMH to chalk up organic sales growth of about 4% in 2025.

Certainly, Arnault is backing the group – he has spent more than $100 million buying stock in the past two months.

 

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