The world’s most powerful luxury goods CEO, LVMH’s Bernard Arnault. (Photo by Stefano Rellandini / … [+] AFP) (Photo by STEFANO RELLANDINI/AFP via Getty Images)
LVMH Moët Hennessy Louis Vuitton, the owner of multiple luxury brands including Tiffany, Louis Vuitton, and Dior, remains mired in an extended global downturn for high-end goods and is moving at pace to make its business more robust in troubled times. But the French luxury conglomerate saw its stock slide by more than 6% since Tuesday evening’s reveal of its 2024 annual results.
Turnaround measures have included appointing the company’s long-time chief financial officer Jean-Jacques Guiony to replace the current CEO of Moët Hennessy, its weakening wine and spirits division, from February. Meanwhile, at its poorly performing travel retail business DFS Group—rumored to be for sale—an interim CEO is restructuring the business after the departure of its former head, Benjamin Vuchot.
On Tuesday evening, billionaire LVMH chairman and CEO Bernard Arnault pushed back on divestment questions from analysts and press (based on live translations during the conference). On a query from BNP Paribas about Moët Hennessy potentially being for sale, Arnault pooh-poohed the idea and said: “It is not on the agenda.”
A little later a question about DFS and its possible divestment was met with less clarity. “I can’t tell you much… I can’t tell you anything, sorry,” said Arnault, an answer which will only fuel speculation that DFS is on the chopping block.
Further evidence of that came via a further query from French newspaper Le Monde on the lack of profitability at the luxury group’s Parisian department store La Samaritaine—supposedly to the tune of €90 million ($94 million). The store was part of the DFS portfolio. Guiony responded: “I have no idea where that figure comes from… it is entirely preposterous. The management was mainly focused on Chinese customers and we are taking it out of DFS Group and putting it into LVMH to focus on a broader customer base.”
LVMH’s death in Venice
That is one explanation. Another is that if LVMH is looking to divest DFS as a going travel retail concern, making the business sale-fit would mean trimming its non-core assets. La Samaritaine is unlikely to appeal to global duty-free retailers such as Avolta or Lagardère Travel Retail as it is essentially a domestic retailer appealing to tourists.
A thing of beauty: La Samaritaine in Paris is now under LVMH’s wing, instead of DFS’s. (Photo by … [+] Frédéric Soltan/Corbis via Getty Images)
Furthermore, the department store is an iconic, must-see venue in Paris that, in many ways, is part of the identity of LVMH Group; letting it go is therefore not an option, regardless of any losses. The restructure of DFS, led by Ed Brennan, an LVMH veteran, has already led to a casualty—the DFS Galleria in Venice is scheduled to cease operations this year after opening less than a decade ago in 2016 to much fanfare. Its closure and La Samaritaine’s transfer to the parent, bring DFS’s ambitions for expansion in Europe to an end.
As for LVMH’s 2024 performance, the luxury goods group recorded revenue of €84.7 billion ($98.5 billion), down 2% on the previous year, with profit from recurring operations sliding by 14% to €19.6 billion ($20.4 billion). There was a marginal revenue upturn in Q4. Among the company’s five divisions, wine and spirits dragged the group down the most at 11% during the year, while fashion and leather goods, and watches and jewelry were both down by 3% each.
LVMH upbeat but stock slides
The company pointed out that there was a high basis of comparison “following several years of exceptional post-Covid growth” while exchange rate fluctuations had a substantial negative impact to the tune of €1 billion. Arnault described the result as “LVMH showing strong resilience” and a “capacity to weather the storm in highly turbulent times.”
Louise Deglise-Favre, senior apparel analyst at data and analytics company, GlobalData, commented: “LVMH’s results beat expectations in the fourth quarter… a significant improvement compared to the 3.5% decline it reported in the nine months to September.” She believes the numbers indicate that “the worst of the luxury slowdown might be over as macroeconomic and geopolitical issues start to subside.”
Markets don’t agree. LVMH’s stock peaked at €761.10 at 5pm (CEST) on Tuesday, the same time the company released its results for 2024. Within 40 minutes the price had fallen to €750.60 and by Wednesday’s close it was languishing at €711.70, a big 6.5% fall from the luxury group’s highest share price this year.
