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LVMH results spark optimism for luxury market rebound

Annual results from LVMH, Europe’s largest company and the global leader in luxury goods, have added to hopes that the trend of depressed spending over the past two years may be weakening.

In the final quarter of the year, LVMH surpassed investors’ expectations, mirroring the strong performance of Burberry and Richemont, the owner of Cartier, both of which also exceeded forecasts as 2024 came to a close.

In the three months to Christmas LVMH’s organic sales rose by 1% to €23.9 billion compared with the same period in 2023. Analysts had predicted a 1.25% fall.

Finance head Jean-Jacques Guiony said while the year overall had been “roughly stable”, the October to December quarter had been “objectively better” in Europe and the US.

“It’s not great, but it’s also not a catastrophe compared to some commentaries,” he told the Financial Times.

Struggles in wine and spirits

However, the Moët Hennessy wines and spirits division continued to struggle against the global slowdown in alcohol demand in the wake of the revenge spending spree at the coronavirus lockdowns. Demand remained weak in China and Americans continued to switch away from Cognac, despite Hennessy discounting to maintain market share.

The division’s revenues fell by €740 million during the year, an 11% slump or 8% on an organic basis.  Those poor numbers came off the back of a dismal 2023 when wine and spirits sales fell by 7%, or 4% on an organic basis.

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Moët Hennessy was also hit by the deterioration of the euro against major currencies, notably the US dollar.

The problems of LVMH’s worst-performing division fall squarely into Guiony’s lap later this week when he moves across to head Moët Hennessy as part of a top-level reshuffle by Bernard Arnault, the group’s chairman and CEO.

Strong profitability

Overall, the group’s profit from recurring operations for 2024 came to €19.6 billion, equating to an operating margin of 23.1% which significantly exceeded pre-Covid levels. 

While Arnault made no forecasts for 2025, Guiony sounded positive notes.

“We’re in a ‘wait and see’ mode because the economy in the US is good but our performance is linked to inflation, to interest rates and to regaining confidence...from aspirational customers who were under pressure earlier in the years. That’s all underway now,” he said. 

Meanwhile, China remained depressed, but trading had improved marginally in the past three months.

On growing expectations of improving demand, shares in the French luxury goods giant have risen by 18% since January 1, having lost more than 13% last year.

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