by Mimosa Spencer, Tassilo Hummel and Florence Loeve

PARIS (Reuters) – The French luxury group LVMH announced on Monday an organic decline of 3% of its sales in the first quarter, disappointing expectations and confirming the slowdown crossed by the sector.

The contraction of turnover in the first quarter, after growth of 1% in the last three months of 2024, risks being poorly welcomed by investors.

Mother house of Louis Vuitton and Dior fashion brands, Bulgari jewelry or even Hennessy spirits, LVMH experienced a “difficult start” for the 2025 exercise, Bernstein analysts commented.

The group reported a turnover of 20.311 billion euros for the three months until the end of March.

This result is both lower than that of the previous quarter and the expectations of analysts who anticipated an increase of 2%, according to a consensus cited by Visiblealpha.

European luxury groups counted on affluent Americans to revive the growth of the sector at the start of this year, while the prospects for China, another crucial market for the sector, remain gloomy.

Luxury is preparing for what could be its longest crisis in years. In the United States, fears of a recession increased after the customs duties announced by President Donald Trump who dived the stock markets and the dollar.

“LVMH shows good resistance and continues its strong dynamic of innovation despite a disturbed geopolitical and economic context,” the group said in a statement.

According to RBC analysts, investors concerns about the resumption of demand may be amplified by these results.

Dior has a train

The fashion and leather goods division, which houses Louis Vuitton and Dior and represents almost half of the group’s sales and more than three quarters of the operating profit, recorded an organic decline of 5% of its sales.

“Louis Vuitton continues to deliver slightly better performance than the average (within the fashion and leather goods division), and Dior continues to deliver slightly worse than the average performance,” said Cécile Cabanis, the group’s financial director, during a call conference with analysts.

“Dior seems to be the most important problem in the fashion and leather goods division – The effects of artistic management changes are slow to appear,” said Bernstein analysts in a note.

Faced with difficulties in two key markets, the United States and China, the LVMH Wines and Spirits division, which houses Champagne Krug and Cognac Hennessy, reported a 9%drop-in sales.

Sales in the United States fell 3% in organic in the first quarter, while in the Asia region, which excludes Japan, they fell 11%.

“The United States is experiencing a slight decrease despite a good performance in mode and leather goods, and in watches and jewelry,” said LVMH in its press release.

Luxury seems better armed than other sectors to preserve its profits despite the customs of customs rights by its ability to increase its selling prices in the face of wealthy customers. If they were fully applied, American customs duties would include a 20% tax in fashion and European leather goods and 31% on watches made in Switzerland.

Donald Trump announced last Wednesday a suspension of most of his “reciprocal” customs duties for 90 days, while maintaining a floor rate of 10%.

Asked about the impact of these customs rights on LVMH activities in the United States, financial director Cécile Cabanis said that the group had not noted “major change of trend” and have “nothing to report in particular” for the first quarter.

However, she specified that the group would consider increasing its prices to compensate for the impact of potential customs duties, among the tracks envisaged to mitigate the impact of these surcharges.

Cécile Cabanis also mentioned the possibility of increasing the production of LVMH in the United States, without specifying at what rate or to what extent.

(Mimosa Spencer, Tassilo Hummel and Florence Lève, edited by Kate Entringer)

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