LVMH's net profit falls by 14% in the first half of 2024

Recently, luxury goods group LVMH released its financial report for the first half of 2024. The report reveals that LVMH's revenue for the first half of the year decreased by 1% year-on-year to EUR 41.677 billion, achieving 2% organic growth. Net profit dropped by 14% year-on-year to EUR 7.267 billion. LVMH stated that currency fluctuations had a significant negative impact on the half-year performance, particularly affecting its fashion and leather goods business.

By quarter, LVMH's global sales revenue fell by 2% year-on-year to EUR 20.7 billion in the first quarter, with organic growth of 3%. In the second quarter, global sales revenue declined by 1% year-on-year to EUR 21 billion, with organic growth of 1%, a slower rate compared to the first quarter.

In terms of business segments, LVMH's largest revenue source is its fashion and leather goods division, which includes brands such as Louis Vuitton (LV), Dior, Celine, and Fendi. In the first half of 2024, this segment's revenue was EUR 20.77 billion, down 2% year-on-year.

The perfume and cosmetics division had sales of EUR 4.1 billion in the first half of the year, up 3% from the previous year. Brands like Christian Dior and Guerlain performed exceptionally well. Notably, Asia (excluding Japan) remains the largest market for the group's perfume and cosmetics business, accounting for 32% of this division's revenue in the first half of 2024.

The Selective Retailing segment, which includes Sephora, achieved sales of EUR 8.632 billion in the first half of 2024, marking a 3% year-on-year increase. The report notes that Sephora saw significant growth, particularly in North America, Europe, and the Middle East.

In fact, LVMH's revenue growth slowed noticeably in 2023. The financial report shows that LVMH's revenue for 2023 was EUR 86.2 billion, up 9% year-on-year, and net profit was EUR 15.2 billion, up 8% year-on-year. Although these figures were roughly in line with market expectations, they were less than half the growth rate of 2022.

Looking ahead to the second half of 2024, LVMH Chairman and CEO Bernard Arnault said, "The performance in the first half of this year reflects LVMH's resilience, thanks to the strength of its brands and the team's ability to respond to economic and geopolitical uncertainties. The group will enter the second half of the year with confidence."

LVMH's performance in the Chinese market also fell short of expectations. According to the report, sales in Asia (excluding Japan), led by China, decreased by 10% year-on-year in the first half of 2024, with a 14% decline in the second quarter.

In 2023, Asia (excluding Japan), including China, contributed the highest revenue of EUR 26.707 billion, accounting for 31% of LVMH's total revenue, with a revenue growth rate of 12% and organic growth of 18%.

During the first half of 2024 earnings call, LVMH CFO Jean-Jacques Guiony mentioned that the number of Chinese consumers increased by high single digits year-on-year in the first half of the year, with a 10% increase in the first quarter and slightly lower growth in the second quarter.

It is worth noting that LVMH continues to bet on the expansion of the Chinese market. Jean-Jacques Guiony has revealed that the number of LVMH customers in China is twice that of 2019, with significant growth in domestic purchases. To meet this demand, brands such as LV and Dior are considering opening larger stores in China.