By PARIS (Reuters) – Shares in LVMH fell on Wednesday, dragging down the broader luxury goods sector, after it missed expectations with a 3% drop in third quarter sales, adding to investor concerns about the consumer appetite for luxury goods.
LVMH shares were down around 7% in early session trading. Also in the sector, Kering (EPA:PRTP), whose brands include Gucci, traded down 5.2%, while L’Oreal was down 4.3%.
LVMH late on Tuesday posted its first decline in quarterly sales since the pandemic as demand in China and Japan weakened.
Chinese consumer confidence has sunk to the lows of the COVID-19 era, the company told analysts late on Tuesday, noting a “marked deterioration” in business for its fashion and leather goods division, home to Louis Vuitton and Dior, with shoppers in Mainland China.
“LVMH’s Q3 trading update failed to reassure, suggesting that trends are actually softer than feared,” wrote investment bank JP Morgan, which kept a “neutral” rating on LVMH.
China has been a major source of concern for luxury sector investors. Stimulus measures in China briefly fueled hopes of a recovery that remains elusive.
($1 = 0.9189 euros)