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A weaker-than-expected revenue report was the news item driving down LVMH Moët Hennessy -- Louis Vuitton's (OTC: LVMUY) American depositary shares (ADS) on Monday. The luxury goods maker saw its ADS price sag by more than 6% as a result, contrasting unfavorably with the S&P 500 index's 0.8% increase on the day.
First-quarter flop
On Sunday, LVMH published details of its first-quarter revenue, showing that its total top line for the period was just over 20.3 billion euros ($23.1 billion). That figure was down by 3% on a year-over-year basis. It also failed to reach the consensus analyst estimate of $24.1 billion.
The slump mirrored the performance of most of the company's divisions. Fashion and leather goods, by far its most significant in terms of revenue, was buffeted by a 5% decline from the first-quarter 2024 result, bringing in $11.5 billion.
The No. 2 category, selective retailing, fell by 1% to $4.8 billion, while watches and jewelry improved, but only marginally to under $2.8 billion.
In the very selective financial release, LVMH attributed the slides to a generally "disrupted geopolitical and economic environment."
In a more granular remark, chief financial officer Cécile Cabanis said in a conference call, "The main swing factor is really linked to last year's Chinese demand in Japan." At that time, Chinese consumers were largely responsible for a pop in company sales in the nearby country, following the weakening of the yen.
A justifiable reaction
It's discouraging that the one blip in growth for LVMH recently was largely due to a quirk related to currency movements. Times aren't good for luxury retailers just now, with a nervous world pulling back on spending as the current global trade conflict plays out. I don't see any potentially good drivers for LVMH on the horizon, so I don't blame investors for selling this stock.
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