LVMH’s Full Year 2024 Results Point to Positive Trends with A Cautionary Chaser

FSW reviews the latest earnings report from luxury's bellweather

Luxury bellwether LVMH reported its full-year 2024 results after the close in Paris on January 27. The industry had a weak first nine months of the year, at least relative to the historic post-pandemic growth rates. Expectations were for a 1 percent decline in Q4 group sales year over year, which implied a decent bounce back after a 4.4 percent decline in Q3, but still in the wrong direction.

What we got was something a bit better for Q4 and a much better story going into H1. Overall reported group sales were down 0.1 percent in Q4, with positive 1 percent organic growth. This still left LVMH with a roughly 2 percent decline for the full year, following annual growth rates of 44 percent, 23 percent, and 9 percent during 2021-23.

But the key story from our way of looking through the prism is that this was a strong report. Fashion and leather goods (48 percent of group revenue), selective retailing (mostly Sephora and 22 percent of revenue) and watches and jewelry (12 percent) recorded significantly stronger sales in Q4 than in Q3. These three business groups comprised 83 percent of total sales and finished up 29 percent from October to December relative to July to September. This points to a potentially more promising prognosis for H1 2025 than the market expected just a few weeks ago, particularly after Richemont, Burberry, and Zegna also reported better-than-expected sales numbers this week.

There were also some cautionary elements for LVMH that have implications for the rest of the industry. First, China continued to be a weak spot. Only a few major luxury brands have continued to record strong onshore China sales (e.g., Hermès and Brunello Cucinelli) but LVMH is not one of them. Annual organic revenue growth was down 11 percent on the year, which is bad news since Asia (x. Japan) still kicks in around a third of group sales. Europe (a quarter of group sales) was a bright spot with 3 percent growth with the U.S. (also a quarter) up 2 percent. There have been hopes expressed that renewed broad-based U.S. luxury demand could improve the arithmetic for the industry going into H1. But a surprise decline in U.S. consumer confidence, as revealed by the release of the latest University of Michigan Consumer Sentiment Index on January 27, may pour some cold water on that plan though it is, of course, only one data point.

A second cautionary element is that LVMH’s gross margins declined by 4 percent in 2024. During the conference call, CFO Jean-Jacques Guiony pointed out that margins remain significantly higher than before the post-pandemic industry surge. However, a cause in this case may be an inability to exercise pricing power. Bernard Arnault noted that LVMH had kept prices steady over the year. Does this point to more generally limited pricing power going into 2025 after years where pricing, rather than volume growth and product mix, drove the industry’s prospects?

The 2024 results were issued after Paris trading closed on Tuesday, but the OTC secondary LVMHF listing in the U.S. closed down 2.3 percent, recovering after falling over 7 percent intraday. Yet, like much of the rest of the luxury industry this year, LVMH’s share price has had a strong start to 2025 and is up around 20 percent year-to-date as compared to a 0.6 percent and 4 percent return on the S&P 500 and the Eurostoxx 50, respectively. Our FSW Markets All Luxury Index is up around 17 percent.