The ADRs of luxury goods maker LVMH Moet Hennessy Louis Vuitton SA (EPA:LVMH) (OTC:LVMUY) dropped more than 6% on Monday following the release of its Q1 results. Total organic sales declined 3% to EUR 20.311 billion, missing analyst expectations of 2% growth.

Q1 Performance Overview

• Total Organic Sales:

  • Fell 3% to EUR 20.311 billion

  • Analysts had anticipated 2% growth

• Segment Highlights:

  • Fashion & Leather Goods: Sales fell 5% to EUR 10.108 billion

  • Wines & Spirits: Sales declined 9%; Champagne dipped slightly, while Cognac suffered from weaker demand in China and the U.S.

  • Perfumes & Cosmetics: Organic sales dropped 1%

  • Watches & Jewelry: Sales remained flat year-over-year

  • Selective Retailing: Sales were down 1% organically

Regional Performance

• Europe: Recorded growth on a constant consolidation and currency basis.

• United States: Experienced a slight decline despite strong performance in key segments.

• Japan: Sales were down compared to Q1 2024, following strong growth in Chinese consumer spending last year.

• Rest of Asia: Comparable trends to the previous year.

Analysts' Reaction

• Morgan Stanley downgraded LVMH shares to Equal Weight following the report.

• They forecast a -3% organic sales growth for Q2 2025, a sharp change from their previous estimate of +2%.

• Analysts warned that if the projection materializes, it would be the first time in over 30 years that LVMH's Fragrance & Luxury Goods division records four consecutive quarters of sales contraction.

• They noted that a softer global macro environment and subdued demand from China are likely to keep the industry's top-line performance anemic over the next 12 months.

Market Context

The recent decline in LVMH's Q1 performance comes amid broader macroeconomic challenges, including a softer global environment and pricing pressures. The ongoing weakness in demand from key markets such as China has intensified concerns about luxury sales going forward.

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