LVMH Reports 17% Drop in Net Profit Amid challenging 2024
The world’s leading luxury goods group, LVMH, announced a 17% decline in net profit for 2024, falling to €12.55 billion. Sales also dipped by 2% to €84.7 billion, reflecting a turbulent year for the luxury giant.
“In the uncertain context of 2024, LVMH has shown good resistance,” said CEO Bernard Arnault in a press release. “With always the greatest vigilance of management and our obsession for the desirability of our creations, we approach the year 2025 with confidence.”
The company’s profitability took a hit, with its operating margin dropping to 23% from 26.5% in 2023. Jean-Jacques Guiony, LVMH’s financial director, described 2024 as a “year of consolidation” following three years of “euphoria” in 2021, 2022, and 2023.
Despite the challenges, there were signs of improvement toward the end of the year. “We have a slight tendency to improve in the United States and europe at the end of the year, the fourth quarter being a little better,” Guiony noted. Fourth-quarter sales remained stable at €23.9 billion.
Key Performance Highlights
Table of Contents
| Category | 2024 Sales | Change |
|————————–|———————-|——————–|
| Fashion & Leather Goods | €41 billion | -3% |
| Selective Distribution | €18 billion | +2% |
| Perfumes & Cosmetics | €8.4 billion | Stable |
| Watches & Jewelry | €10.58 billion | -3% |
| Wines & Spirits | €5.9 billion | -11% |
The fashion and leather goods division,which includes iconic brands like Louis Vuitton and Dior, saw a 3% decline in sales to €41 billion. Meanwhile, selective distribution and perfumes & cosmetics showed resilience, with the former growing by 2% to €18 billion.
Watches and jewelry sales fell by 3% to €10.58 billion, while wines and spirits experienced a significant 11% drop to €5.9 billion.
Looking ahead, LVMH plans to reward its shareholders with a dividend of €13 per share during its general meeting on April 17.
As the luxury sector navigates a shifting economic landscape, LVMH remains cautiously optimistic.With its focus on innovation and desirability, the group is poised to tackle the challenges of 2025 head-on.
LVMH’s 2024 Performance: A Deep Dive into Challenges and Opportunities in the Luxury Sector
In a year marked by economic uncertainty, luxury conglomerate LVMH faced significant headwinds, reporting a 17% decline in net profit for 2024. With sales down 2% to €84.7 billion, the company navigated a challenging landscape while finding resilience in certain divisions. To unpack the details and explore what lies ahead, we spoke with Dr. Isabelle Moreau, a leading expert in luxury markets and global economic trends, for her insights.
editor: Dr. moreau, LVMH’s 2024 results reflect a tough year for the luxury sector. What were the primary factors contributing to the 17% drop in net profit?
Dr. Moreau: The decline can be attributed to a combination of macroeconomic factors and shifts in consumer behavior. Rising inflation, geopolitical tensions, and a slowdown in discretionary spending, notably in key markets like China, weighed heavily on luxury consumption. additionally, the strong euro impacted overseas revenues. While LVMH’s iconic brands like Louis Vuitton and Dior have always been resilient, they weren’t immune to these broader challenges.
Resilience in Select Divisions: Selective Distribution and Perfumes & Cosmetics
Editor: Despite the overall decline,selective distribution and perfumes & cosmetics showed positive growth. What drove this resilience?
Dr. Moreau: Selective distribution benefited from the continued demand for travel retail and duty-free shopping, which rebounded post-pandemic. Perfumes and cosmetics, conversely, remained stable due to their accessibility. These categories are often seen as entry points into luxury, making them less sensitive to economic downturns. LVMH’s ability to innovate and maintain brand desirability in these areas also played a key role.
Declines in Fashion & Leather Goods, watches & Jewelry, and Wines & Spirits
Editor: Conversely, fashion and leather goods, watches and jewelry, and wines and spirits experienced declines. What’s behind these trends?
Dr. Moreau: Fashion and leather goods, while still LVMH’s largest division, saw a 3% drop in sales. This reflects a broader slowdown in high-end fashion, particularly in markets like the U.S. and Europe. Watches and jewelry faced similar challenges,with reduced demand for luxury timepieces.Wines and spirits, however, were hit the hardest, declining by 11%. This sector is highly sensitive to economic cycles, and reduced consumer spending on premium brands like Hennessy and Moët & Chandon had a significant impact.
Looking Ahead: Optimism and Strategic Focus
Editor: LVMH’s leadership remains cautiously optimistic about 2025. What strategies might help the company navigate the coming year?
Dr. Moreau: Innovation and brand desirability will be critical. LVMH has always excelled at maintaining the allure of its brands, and this will be key to driving recovery.Additionally, the company is likely to focus on emerging markets and digital change to offset weaknesses in traditional strongholds. the decision to reward shareholders with a €13 per share dividend also signals confidence in long-term growth. While challenges persist,LVMH’s agility and strategic foresight position it well for the future.
Conclusion
Editor: Thank you, Dr. Moreau, for your insights. It’s clear that while 2024 was a challenging year for LVMH, the company’s resilience and strategic focus offer hope for a stronger 2025. Stay tuned for more updates on the luxury sector’s evolving landscape.
