LVMH investors are closely monitoring China’s new economic measures, hoping they would inspire wealthy and middle-class Chinese consumers ahead of Singles Day, the country’s biggest annual shopping event. It has been analysed that this period may be the toughest for the luxury sector in four years, as the company’s third-quarter revenue announcement was made on Tuesday.
The global luxury market, including high-end fashion, accessories, and beauty products, is expected to see minimal growth this year, ranging from flat to a 4 per cent increase. LVMH, known for brands like Louis Vuitton, Dior, Tiffany & Co., and Sephora, has seen its shares fluctuate alongside peers such as Kering, Hermès, and Richemont.
Bank of America’s analysts suggest the luxury sector is facing significant challenges, particularly in China, where a lack of consumer confidence linked to the struggling property market continues to weigh on sales. They predict a 1 per cent drop in organic sales year-on-year for the third quarter and have revised earnings forecasts down by 17 per cent for next year.
Looking forward, experts anticipate a revival in Chinese demand for luxury goods, especially by 2025. LVMH is strengthening its presence in China, expanding its partnership with Alibaba to utilize the e-commerce giant’s cloud and AI capabilities. Additionally, its travel retail division, DFS Group, is developing a major shopping and entertainment complex on Hainan Island.
