LVMH earnings highlight uneven recovery in the luxury goods sector

The French luxury goods conglomerate's American Depositary Receipts (ADRs) slumped 8.5% in the US following the results. However, LVMH's shares have risen by 18% this year in European markets, driven by optimism surrounding an improved macroeconomic environment and strong earnings from rival Richemont.

In the fourth quarter, total revenue rose by 1% year on year to €23.93 billion. This figure represents a 25% jump from the third quarter, when LVMH posted its first year-on-year decline since the pandemic. Full-year organic sales revenue increased by 1% in 2024 to €84.68bn, surpassing analysts' expectations of a 2% decline.

However, profit from recurring operations fell by 14% year on year, despite a 5% reduction in marketing expenses. Free cash flow rose 29% annually to €10.5bn. 

LVMH stated that all key regions, including Europe, the US, and Japan, saw sales growth, adding that the rest of Asia "reflected the strong growth in spending by Chinese customers in Europe and Japan". 

Among its business segments, its largest revenue contributor - fashion and leather goods, which includes Louis Vuitton and Christian Dior - recorded a 1% annual decline, while wine and spirits slumped by 8% during the fourth quarter. However, perfumes and cosmetics posted a modest 2% increase from 2023.

Revenue in the watches and jewellery segment, which includes brands such as Bulgari and Tiffany, rose by 2%. All figures are organic, based on a constant consolidation scope and currency basis. On a reported basis, overall revenue declined by 2%, with the company citing: "Exchange rate fluctuations had a substantial negative impact during the year, particularly on Fashion & Leather Goods and Wines & Spirits."

CEO Bernard Arnault commented: “In 2024,