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French luxury conglomerate LVMH reported a 3% decrease in third-quarter sales, falling short of expectations and marking its first quarterly sales decline since the start of the pandemic. The company generated 19.08 billion euros ($20.8 billion) in revenue for the quarter, a 3% organic decline. This missed the consensus estimate of 2% organic growth. Analysts expressed disappointment with the results, citing declines across all divisions. The fashion and leather goods segment, which includes Louis Vuitton and Dior, saw a 5% drop in sales, the first decline since 2020.

The sales report reflects concerns in the luxury sector as consumer purchasing power wanes amid economic uncertainty. In Asia, excluding Japan, sales declined by 16%, with the Chinese market being a significant factor. Market jitters have increased as Chinese enthusiasm for luxury goods wanes due to the country’s property crisis impacting consumer confidence. In Japan, sales growth slowed to 20% from the previous quarter’s 57% increase due to a stronger yen. Overall, the results are expected to be viewed negatively by the market, indicating a more significant slowdown than anticipated.

UBS has forecasted that the third quarter will be the worst for the luxury sector in four years, with a 1% decline in organic sales year-on-year.

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