The latest data shows that the revenue growth rate of luxury goods giant LVMH has significantly slowed down. Due to underperformance compared to market expectations, LVMH's stock price plummeted by over 6% on October 11th, and continued to decline by 1.62% on October 12th. The decline in LVMH's stock price also dragged down European luxury goods stocks, with Dior Group falling 4.68% and Richemont Group falling 0.32%.
On October 10th, LVMH, the world's largest luxury goods group, released its financial report for the third quarter of 2023. In the three months ending September 30th, the company's sales amounted to 19.96 billion euros, a year-on-year increase of only 1%, a significant slowdown in growth compared to the first half of the year; Organic revenue increased by 9% year-on-year, much lower than the 17% in the previous quarter, and the month on month growth rate was close to halving, which was also lower than the 11% expected by analysts. After the above data was disclosed, LVMH's stock price plummeted significantly. As of the close on October 11th, LVMH's stock price fell 6.46% to close at 686.1 euros per share, with a market value shrinking to 344.5 billion euros.
It is worth noting that on the afternoon of October 12th, Deutsche Bank lowered LVMH Group's European stock target price from 815 euros to 805 euros, and JPMorgan Chase lowered LVMH Group's European stock target price from 870 euros to 835 euros.
From a business perspective, LVMH's core fashion and leather products business achieved organic revenue of 9.75 billion euros in the third quarter, with a year-on-year growth rate dropping sharply from 21% to 9%, a significant drop. The organic revenue of the wine and spirits business decreased by 14% year-on-year to 1.509 billion euros, becoming the only declining business of the group.
In addition, the organic income growth of perfume and cosmetics business and jewelry and watch department also fell back to single digits. The organic revenue of perfume and cosmetics business in the third quarter increased by 9% to 1.993 billion euros, while the organic revenue growth of Tiffany and Bulgari's jewelry and watch department in the third quarter narrowed from 14% to 3%, and the organic revenue was 2.524 billion euros.
Benefiting from the recovery of global tourism retail, DFS and Sephora's selected retail division became LVMH Group's best performing business for the quarter. Organic revenue increased by 26% year-on-year to 4.076 billion euros.
In various markets, the performance of the Asian market where China is located (excluding Japan) has always been highly regarded. In the second quarter of 2023, the Asian market led the global market with a growth rate of 34%, even surpassing Japan's growth rate of 29%. However, in the third quarter, China's Asian market did not continue its previous high growth, with a significant decline in growth rate to 11%. Regarding this, Jean Jacques Guiony, Chief Financial Officer of LVMH Group, explained that compared to two years ago, there has been no significant change in China's demand for fashion and leather products, and the decline in growth rate is due to a large number of Chinese consumers shifting to overseas consumption.
In addition, LVMH's growth rate in Europe has also declined from 19% in the second quarter to 7%. The US market has rebounded, rising from negative growth to 2% growth, while Japan continues to lead the world with a high growth rate of 30%.
