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LVMH's Moët Hennessy has reportedly planned to lay off thousands of its employees as the luxury category slows down.
According to reports from La Lettre, which first broke the story, and the Financial Times, Moët Hennessy's CEO Jean-Jacques Guiony and his deputy Alexandre Arnault told employees at LVMH's wine-and-spirits division that it planned to reduce its staff to 2019 levels.
In a video sent to workers, viewed by Financial Times, Guiony reportedly said the current headcount 9,400 would need to be cut by around 1,200.
LVMH and Moët Hennessy did not respond to Just Drinks' requests for comment at the time of writing.
Guiony reportedly added that the Moët Hennessy business was seeing 2019 revenues, but that costs had grown by 35% since that point.
“This was an organisation that was built for a much larger size of business,” Guiony said in the video. “People realise . . . that this [rebuilding sales] is not going to happen anytime soon.”
LVMH's wine and spirits division saw its first quarter sales decline last month, due to weak demand for Cognac in both the US and China.
The Hennessy brand owner said the division’s revenue fell by 8% and 9% on a reported and organic basis, respectively, to €1.3bn ($1.5bn) in the period.
For the Cognac and spirits segment, organic sales dropped 17% on the prior year to €736m, which LVMH put down to ongoing “soft demand” for Cognac in China and the US, and “uncertainties” linked to US tariffs.
Champagne revenue also dipped 1% on an organic basis to €680m in the quarter, “reflecting the ongoing normalisation of demand”, the group said.
In the video sent to workers, Guiony and Arnault also reportedly said that some staff would be moved into vacant roles in other parts of the business.
The company did not mention how long the layoffs process would take.
Arnault also reportedly told the company’s employees that LVMH was facing a situation that was a “bit unique” as all of its biggest divisions are in crises.
“Usually at LVMH when wines and spirits are not going well, fashion is doing well or some [other part of the business] is performing differently. Right now things are not going extremely well,” he said.
“Things are bad but they will become better. This is a cycle,” Guiony said, also noting that US tariffs also brought uncertainty.
In a results call for its first quarter results last month, LVMH CFO Cécile Cabanis also reflected on the trading environment.
She told analysts: "The US political context might not have helped on demand in the most recent week. As you know, wine-and-spirits is a category that remains very much linked to contextual issues as it addresses aspirational customers.”