Key facts
- LVMH reported a 3% rise in second-quarter sales, reaching €19.5 billion.
- U.S. demand was strong, with sales up 6% in the quarter, offsetting weakness elsewhere.
- The fashion and leather goods division saw 1% organic growth, the first increase in two years.
- The Iran war impacted growth by 1 percentage point in the fashion division.
- Sales in Europe were flat, stabilizing after a prior decline.
- First-half profits from current operations decreased by 4% to €8.7 billion.
Luxury giant LVMH reported a 3% rise in second-quarter sales, reaching €19.5 billion, as robust demand in the United States helped to counterbalance weaker spending in Europe and the Gulf, influenced by the ongoing Iran war. This performance met analysts' consensus estimates.
The U.S. market showed significant strength, with sales climbing 6% in the second quarter, following a 3% increase in the first three months of the year. This growth has led European luxury brands to increase their focus on the American market, opening new stores and hosting events to attract affluent consumers benefiting from the AI and technology boom.
However, the update from LVMH, the first major luxury group to release its first-half results, may not fully alleviate investor concerns about the broader $400 billion luxury sector, which has been experiencing a two-year downturn. The crucial fashion and leather goods division, responsible for the majority of LVMH's operating profit, recorded 1% organic growth. While this marks its first quarterly increase in two years, it fell short of analysts' expectations of a 1.7% rise. LVMH stated that the Iran war reduced this division's growth by one percentage point, though it noted Dior is gaining momentum under its new creative director.
Sales in Europe remained flat during the quarter, indicating a stabilization after a decline in the first quarter, partly due to the impact of Middle East conflict on tourism. For the first half of the year, LVMH's sales increased by 2% on an organic basis, but decreased by 3% on a reported basis to €38.6 billion. Profits from current operations for the same period fell by 4% to €8.7 billion, with the operating margin remaining broadly stable at 22.5%. Shares in the French group have declined 28% year-to-date, making it one of Europe's worst-performing large-cap stocks.