Updated 4:10 p.m. ET April 14
Despite being in “unknown territory” at the behest of the Trump administration and its stop-and-go tariffs, LVMH Moët Hennessy Louis Vuitton said Monday it would not radically change its policy of selectively producing some luxury goods in America.
And it remains relatively sanguine about the linchpin market, with chief financial officer Cécile Cabanis touting that the group’s American clientele remains “well oriented toward fashion and leather goods.”
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“We didn’t see a major change in trend,” Cabanis told a conference call Monday night after the French luxury group reported a 2 percent dip in first-quarter revenues to 20.31 billion euros and trumpeted its resilience “despite a disrupted geopolitical and economic environment.”
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Stripping out the impact of currency and changes in scope, the decline stood at 3 percent.
By division, organic revenues fell 9 percent in wines and spirits, 5 percent in fashion and leather goods, 1 percent in selective retailing and 1 percent in perfumes and cosmetics. Sales were flat at the watches and jewelry unit, where Bulgari’s Serpenti jewelry is being celebrated during the Year of the Snake.
Still, the overall numbers came in below consensus expectations, with RBC analyst Piral Dadhania warning “investor concerns around underlying demand recovery are likely to be amplified based on these results.”
Thomas Chauvet at Citi said growing pressure on margins and the “prudent tone” of the call would likely further weigh on LVMH shares, which have underperformed “on rising concerns that the group’s top brands and profit contributors [LV, Dior, Tiffany and Bulgari] are no longer delivering best-in-class growth, while the cognac category may be facing more structural challenges and changing consumption behavior.”
Also, given LVMH’s bellwether status, the results “will likely also read across negatively to the wider luxury sector near term.”
The French luxury giant had recorded a 1 percent uptick in organic revenues in the fourth quarter of 2024, with a 1 percent drop at its fashion and leather goods business unit, raising hopes of sequential improvement in the sector.
On Monday, Cabanis blamed the dip in U.S. sales on dampened demand for wines and spirits — cognac in particular — and perfumes and cosmetics as Amazon’s aggressive approach to pricing crimped Sephora’s momentum on e-commerce.
Meanwhile, low traffic in Hong Kong and Macau hurt sales at DFS Group, which is also phasing out its Fondaco dei Tedeschi store in Venice.
Group revenues in the three months ended March 31 fell 11 percent in Asia, excluding Japan, where sales slipped 1 percent, a sharp decrease from a year ago when sales jumped 32 percent due to a surge in Chinese tourism.
Cabanis stressed that LVMH would continue selective investments with the aim of making further market share gains. “We want to make sure we exit this downturn cycle very strongly when demand bounces back,” she said. “We are always working to consolidate our leadership.”
And she argued that innovative, high-quality products continue to sell, even if they carry a premium price.
Case in point: She said Vuitton’s recent encore collaboration with Japanese artist Takashi Murakami sold out completely.
Hinged on multicolor versions of its famous monogram, the Louis Vuitton x Murakami collection was backed with pop-up activations and a campaign fronted by Zendaya.
LVMH also touted a “successful start” for Vuitton’s new Biker bag, and Dior’s Toujours and D-Journey bags.
Pressed for details on the peformance of its various brands, which stretch from Givenchy and Fendi to Kenzo, Cabanis said Vuitton and Loro Piana continue to perform slightly better than the average for its fashion and leather goods business unit, with Dior “slightly below the average.”
In a research note, Bernstein analyst Luca Solca singled out Dior as “the most important problem in the F&LG division,” lamenting that “changes in creative responsibilities are being slow to appear.”
During the call, Solca asked point-blank about the fate of Loewe’s star designer Jonathan Anderson, who recently exited the Spanish brand after an acclaimed 11-year tenure, hinting at reports that he is widely expected to take up a role at Dior.
Cabanis sidestepped the query, offering: “We always need designers who are very creative and aligned with the DNA of the brand.”
Peppered with questions about mitigating the darkening economic picture and volatility around tariffs, the executive suggested that the group would focus mainly on the product mix and carefully calibrate prices, stressing there is no “one-size-fits-all” solution.
And she stressed that shifting to more U.S. production of luxury goods “isn’t something that can be done overnight,” adding, “We are not contemplating to change radically.”
Cabanis noted that its flagship Louis Vuitton currently boasts three U.S. sites for leather goods production, which provide roughly one-third of local needs and can ramp up capacity somewhat.
She noted that Tiffany & Co. also manages to supply most of its American stores with its U.S. production.
The American jeweler got several shoutouts, with Cabanis touting the success of its iconic Tiffany T, Lock, Hardwear and Knot lines, and new-look stores performing well, the latest of which was unveiled on Milan’s via Monta Napoleone. Already, 27 percent of the network has been renovated, she noted.
In terms of tariff risk, LVMH is considered more insulated than its peers given high gross margins in its fashion and leather goods, low exposure to the U.S. market, and that part of its bag lines are manufactured in America, according to Barclays.
In a statement issued Monday after the close of trading on the Paris bourse, LVMH said it remains “both vigilant and confident at the start of the year” and committed to “a sustained policy of innovation and investment.”
LVMH is the first big European luxury player to report first-quarter results, with Hermès International scheduled for Thursday and Kering, parent of Gucci and Saint Laurent, on April 23. The annual results presentation of Swiss group Richemont is expected on May 16.