PARIS, Jan 28 (Reuters) – LVMH shares fell 7% on Wednesday following its fourth-quarter results announcement, with the market disappointed at the luxury group’s weaker margins and cautious tone on the initial signs of a recovery in demand.
LVMH, the world’s biggest luxury conglomerate with brands from Louis Vuitton to Tiffany and Moet & Chandon champagne, is a bellwether for the industry, and the move also dragged down shares in Gucci owner Kering, Moncler and Hermes by between 2% and 5%.
The French group said sales in the key Chinese market grew in the quarter, but the results were less encouraging than expected in the wake of more upbeat comments on China from Richemont and Burberry earlier this month.
Analysts also said a sharp revenue decline at LVMH’s wine and spirits group was a concern, even though the business accounts for only a small share of its overall sales.
CEO Bernard Arnault told a press conference following the results release on Tuesday that LVMH would continue to limit its costs this year, underlining that geopolitical crises and economic uncertainty were reasons to be cautious.
A combination of U.S. tariffs, a weak dollar, and slowing demand has weighed on the group’s profit margins, and finance boss Cecile Cabanis said further sales growth will be needed for margins to rebound.
“We need growth, so we are going to focus on getting growth going again, and continuing to manage our costs,” she said at the press conference.
(Reporting by Helen Reid; Editing by Louise Heavens and Joe Bavier)
