LVMH reports 14% profit decline in H1 2024

FRANCE – LVMH Moët Hennessy Louis Vuitton has reported a 14 percent decrease in profits to €7.2 billion (US$7.9 billion) for the first half of 2024.  

The group’s profit from recurring operations stood at €10.7 billion (US$11.6B), with an operating margin of 25.6 percent. Total revenue for the period amounted to €41.7 billion (US$45.25B), though exchange rate fluctuations negatively impacted results. 

The luxury conglomerate experienced 2 percent organic growth, with Europe and the US showing positive performance on a constant consolidation scope and currency basis. 

Japan recorded double-digit growth, while the rest of Asia saw increased spending by Chinese consumers in both Europe and Japan. However, organic revenue growth slowed to 1 percent in the second quarter. 

LVMH expanded its partnership with Alibaba in May to leverage growing demand in Asia to enhance its omnichannel, data, and technological presence in China.  

Despite these efforts, the company’s Wines & Spirits division continued to struggle, reporting a 9 percent revenue decline and a 26 percent drop in profit from recurring operations in the first half of the year. This was attributed to the ongoing normalization of demand that began in 2023. 

Jean-Jacques Guiony, LVMH’s CFO, acknowledged the challenges faced by the group, particularly in managing the demand for Cognac in China.

“We have lowered the inventories very much in Q2, so our sell-out numbers are better or not as bad as our sell-in numbers,” Guiony said. However, he noted that the sell-out numbers were still not very strong. 

The fashion and leather goods segment, including flagship brands Louis Vuitton and Christian Dior, continued to perform well, maintaining high operating margins. The fragrances and makeup segment, driven by beauty retailer Sephora, also saw rapid growth. 

Looking ahead, Guiony expressed caution regarding Champagne volumes for the second half of the year.

“We have orders from our retailers, but they don’t seem to cheer up much for the second half of the year,” he said. “I wouldn’t bet on a big improvement in trends. Although we expect it to be less bad than the first half of the year, it will probably still be negative.” 

LVMH’s Cognac performance in the US has been particularly problematic. Earlier this year, the group’s organic sales for its Cognac and spirits division fell 16 percent compared to the previous year. The decline follows a pandemic-induced boom and reflects broader industry trends.

Data from the Bureau National Interprofessionel du Cognac (BNIC) indicated that global shipments in 2023 dropped 22.2 percent to 165.2 million bottles. 

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