LVMH, L’Oréal or Kering. The results of consumer and luxury companies show a lower appetite for purchases. Not only is the European economy stagnant, but China’s weakness is weighing on all of these companies, since the Asian country is one of their big clients.
The last one to be held accountable has been Kering and the diagnosis is the same. The owner of Gucci has warned that its operating profit will reach 2.5 billion euros this year, the lowest since 2016. These levels will be reached after a drop in comparable sales of 16% year-on-year in the quarter presented, with revenues of 3,786 million euros. Within its different brands, the Gucci brand is the one that has performed the worst, with 25% less sales.
The firm has justified worse expectations after recognizing that “the great uncertainties will weigh on demand and luxury in the coming months, which adds to a more pronounced decline in sales than expected in the third quarter”, explained in the presentation of results.
As has happened to other of its competitors, Europe is practically at a standstill, with a slight growth in sales, but China is losing steam and that translates into lower turnover. The rest of the world is not enough to compensate for China’s withdrawal.
Added to this photograph is the disappointment with L’Oréal. The firm has presented its results for the third quarter, a period in which it obtained 10,284 million euros in revenue, 3.4% more, but below expectations. The consumer and dermatology divisions have been weaker, with sales declining year-on-year, while luxury and professional products have grown.
The weak point has been the same. “The situation in China has become even more challenging, but we believe in the future of this market and hope that government stimulus will help improve consumer confidence,” said Nicolas Hieronimus, CEO of L’Oréal.
But they are not the only cases. One of the largest companies in Europe, LVMH, already included this situation in its accounts. LVMH’s income stood at 60,753 million euros until September, 2% less year-on-year, according to the presentation published by the firm last week. The Louis Vuitton house had been growing continuously since the pandemic, but in 2024 that streak ended. During the year, quarter after quarter, its sales have weakened.
The owner of Dior, Loewe, Moët & Chandon or Tiffany has lost one of its engines, China. Sales there have fallen for four consecutive quarters. From that geography, sales have decreased by 12% year-on-year, which shows that without it, the rest of the world is not enough.
All this has been reflected in the quotes. Kering has lost 42% of its stock market value in 2024, LVMH has dropped 16.4% in the same time and L’Oréal, 20.5%.
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