LVMH third-quarter sales dragged down by weak Chinese demand for flagship brands

PARIS, Oct 12 — Luxury bellwether LVMH on Monday reported worse-than-expected third-quarter organic sales growth ​as demand for its fashion and leather brands, including Louis Vuitton and Dior deteriorated.

The trading update from LVMH - the ‌world's largest luxury group and the first major firm to report third-quarter results - looked ⁠likely to further unsettle investors ​amid fears that the $350 billion ⁠luxury sector, mired in a three-year slowdown, will struggle to ‌regain its former ‌momentum.

LVMH said in a statement that business activity in China ⁠was less "buoyant", while the United States, ⁠Europe and Japan still saw "good growth".

Organic sales, which strip out currency swings, rose 1% year-on-year to €18.5 billion ($20.65 billion), compared with an 1.3% increase expected by analysts in a Visible Alpha consensus. The fashion and leather goods division, which generates nearly ‌half of group revenue, posted a ​5% fall in organic sales, against an expected 1.8% decline.

Europe's leading luxury groups have lost around €330 billion in market value since the start of the year, with LVMH alone shedding about 40% of its value.

China's tax crackdown on wealthy individuals has become the latest headache for luxury brands, already grappling with ​the fallout from the Iran war and signs of slowing consumer ‌spending in the ‌United States.

LVMH's ⁠fashion and leather division is dominated by Louis Vuitton, by far the group's biggest brand. The label has faced a backlash in China over a copyright dispute with tea chain Molly Tea, which ‌used a logo resembling ​the floral motif used on Louis ‌Vuitton's signature monogram handbags. ⁠The dispute ​drew criticism on social media.

($1 = 0.8960 euros)

(reporting by Tassilo Hummel, editing by ​Dominique Patton)

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