“For now, we still see a lot of Chinese tourists in Japan, which basically tells us that there is no sign of abating of appetite for our brands among mainland Chinese,” LVMH CFO Jean-Jacques Guiony told analysts on Tuesday. “This situation, with Japan attracting most of the growth, is creating a bit of deflationary pressure in China itself, because if they can’t buy at Japanese prices, they won’t buy and will wait until they go to Japan. It’s quite complicated to predict what will happen in the second half of the year. There’s no reason to be pessimistic, but it would be quite bold to be optimistic at this point.”
By category, fragrances and cosmetics increased 4%, watches and jewelry fell 4%, and Selective Retailing, which includes cosmetics retailer Sephora, increased 5%. The wine and spirits category was down 5% for the quarter.
The entire luxury goods industry is facing a slowdown. Richemont also reported a 1% increase in sales for the quarter ended June 30. Burberry reported that its retail sales in the first quarter of 2024 fell 20% year-on-year at constant exchange rates, and Hugo Boss reported that its second-quarter sales fell 1% at constant exchange rates. Kering, Moncler, Hermes and Prada are due to release their figures soon.
Commenting on LVMH’s overall performance, Bernstein Managing Director Luca Solca said: “Overall, this should not be an insurmountable challenge given the minimal magnitude of the shortfall in expectations and the significant decline in LVMH’s share price since the initial enthusiasm following the release of its Q4 2023 results.”
“While continuing to maintain careful attention on the current situation, the Group approaches the second half of the year with confidence and, relying on the agility and talent of its teams, will further strengthen its position as a global leader in luxury goods in 2024,” Arnault said.
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