Photo by Melanie Klepper on Unsplash
The global luxury market, which had been booming after the pandemic, is now facing serious challenges. LVMH (Louis Vuitton Moët Hennessy), the world’s largest luxury group, reported a 3% drop in organic sales in the third quarter of 2024, with revenues totaling €19.1 billion. This slowdown is a sign of changing consumer behaviour, regional challenges, and weaker demand in key markets like China.
China’s Economic Struggles Hurt LVMH
LVMH’s performance in China is one of the main reasons for its weak results. Sales in the wider Asia region, including China, fell by 16% during the third quarter. This decline shows that many Chinese consumers—especially those in the middle class—are spending less on luxury goods.
LVMH’s Chief Financial Officer, Jean-Jacques Guiony, confirmed that consumer confidence in China is now as low as it was during the pandemic. Although China’s government has introduced new policies to boost the economy, they have not yet helped luxury sales. Recent reports from luxury malls show that spending remains weak, even during important shopping periods like Golden Week.
This is a serious problem, as China has been a key driver of growth for luxury brands in recent years. If the economic slowdown continues, LVMH and its competitors like Kering and Richemont will need to find new ways to attract consumers.
Dior Opens a New Store in Warsaw, Poland
While LVMH faces challenges in China, it is looking for new opportunities in other regions. Dior, one of the group’s most important brands, opened a new boutique in Warsaw, Poland, on September 21st. The new store, located in the high-end Vitkac Department Store, offers fashion, accessories, perfumes, and cosmetics.
This move highlights LVMH’s strategy of expanding into emerging markets like Poland, where an increasing number of wealthy consumers are willing to spend on luxury items. As the Chinese market becomes more difficult, Central Eastern Europe could become an important new growth area for luxury brands.
Sales Across Other Markets and Divisions
LVMH’s Q3 results also reflect mixed performances across different regions:
United States: Sales remained flat (0% growth), showing that American consumers are cautious about spending on luxury goods.
Japan: Strong growth earlier this year, but a weaker yen could slow momentum in the coming months.
Europe: Modest growth of 2%, largely driven by tourists.
LVMH’s different product divisions are also feeling the effects of slowing demand:
Fashion & Leather Goods (including Louis Vuitton and Dior) saw a 5% decline in Q3, the first drop since the pandemic.
Wines & Spirits reported a 7% decrease, with Champagne sales down 6%.
Perfumes & Cosmetics grew by 3%, thanks to strong performance from Parfums Christian Dior.
Watches & Jewelry sales dropped by 4%, despite positive contributions from Tiffany & Co. and Bvlgari.
Retailing (which includes Sephora) increased by 2%, but growth has slowed since the start of the year.
This broad decline across LVMH’s divisions shows that the luxury sector is experiencing fatigue, with fewer consumers willing to spend on high-end products.
The Future of Luxury: Challenges and Opportunities
Despite these challenges, LVMH still has opportunities to recover. The company is known for managing its diverse portfolio well and may shift its strategy to focus on new products or regions. The integration of Bernard Arnault’s children into the company’s operations could also bring fresh ideas and new direction for the group.
To regain momentum, LVMH will need to focus on markets outside of China. The U.S. remains an important market, although competition is tough. Central Eastern Europe, Latin America, and the Middle East also offer growth opportunities, as consumers in these regions are showing more interest in luxury goods.
Conclusion: A Critical Moment for LVMH and the Luxury Sector
LVMH’s recent sales decline shows that the luxury industry is no longer immune to global economic challenges. High prices, slowing demand, and uncertainty in key markets like China are making it harder for brands to grow.
However, LVMH’s new boutique in Warsaw shows that the company is actively exploring new markets. If LVMH can adapt to these changing conditions—by offering the right products in the right places—it will be better positioned to thrive in the future.
The next few months will be critical. The fourth quarter will decide whether LVMH can meet its annual sales target of €86.3 billion. While the challenges are real, LVMH’s experience and ability to adjust its strategy give it a good chance of coming out stronger on the other side.
In a shifting luxury landscape, the companies that innovate and diversify will be the ones that succeed.