A sign on the exterior of the Louis Vuitton luxury boutique operated by LVMH Moët Hennessy Louis SE. Photographed on January 25, 2024 in Paris, France.
Benoît Tessier | Reuters
shares of LVMH It fell on Tuesday on signs of a hit to sales from the Iran war, overshadowing an underlying improvement.
The luxury conglomerate missed revenue estimates with organic growth of 1% in the quarter, below FactSet’s estimate of 1.5%.
LVMH also noted a 1% negative impact from the Iran war in the quarter.
“When the conflict started in March, depending on the mall and the business, there were shortages and demand deterioration of 30% to 70%,” LVMH Chief Financial Officer Cécile Cabaniss said on a conference call with analysts late Monday, referring to the Middle East region, which accounts for about 6% of group sales.
“No one knows” what the outcome of the conflict will be, Cabaniss said. “What we haven’t seen yet is repatriation and what we do know is that the wealth hasn’t evaporated. So if the conflict continues, we’ll probably see it happen elsewhere and the impact will be mitigated.”
“The party is postponed,” Belstein analyst Luca Sorca said in a note. The luxury goods sector was beginning to show signs of recovery after years of weakness due to weak demand from Chinese consumers, which was once one of the sector’s main growth drivers.
Even if results are better than a year ago, “this is likely not enough to convince investors to get off the fence,” Solka said. In the first quarter of 2025, overall organic sales declined by 3%.
LVMH shares fell 2% in midday trading in Paris, taking year-to-date losses to 27%. Pan-European leading company Stoxx600 index The index rose 0.9% on expectations that peace talks between the United States and Iran will resume following the U.S. blockade of the Strait of Hormuz.
LVMH stock price since the beginning of the year.
“The two most important populations driving luxury spending, the Chinese and the Americans, are improving and staying strong,” Solka told CNBC’s “Europe Early Edition” on Tuesday.
Organic sales in Europe and Japan each declined 3% in the quarter, while sales in the United States increased 3%. Asia excluding Japan increased by 7%.
Estimate cut
Following this report, multiple analysts lowered their price targets for LVMH stock. Solca lowered its target to 600 euros ($707) from 685 euros and maintained an outperform rating, saying the company is “improving in important areas.”
Sales at the company’s fashion and leather goods division, which accounts for most of its profits, fell 2%. CFO Cabaniss said the sector would have experienced “flat” growth had it not been for the Middle East conflict.
LVMH executives highlighted the momentum of its major brands Louis Vuitton and Dior, as well as the progress of “newness” and creative resurgence, including the appointment of Jonathan Anderson as creative director of Dior last year.
“LVMH’s small failure in Fashion & Leather is likely to signal a cautious stance heading into earnings season,” Citi analysts said, reiterating their price target on the stock, lowered to 621 euros from 664 euros in March.
“The main uncertainty is the impact of the Middle East conflict on the macro picture, consumer confidence and global tourist flows,” he said, but remained positive on stocks in sectors that remain unpopular.
Analysts at Jefferies cut their price target to 510 euros from 610 euros, saying the company’s slow progress is being overshadowed by dilution in the Middle East.
