Despite the poor global economic and geopolitical environment last year, the world's largest luxury goods group LVMH still delivered surprises, maintaining organic growth for the entire year by leveraging existing internal resources rather than external acquisitions. Commentators believe this is the strongest signal yet of a potential recovery in the high-end luxury goods industry.
On January 28, local time Tuesday, LVMH, headquartered in France, announced its financial performance for the fourth quarter and the full year of 2024.
1) Key Financial Data:
<blockquote>
Revenue: Revenue for 2024 was €84.68 billion, a year-on-year decrease of 1.7% compared to 2023, with analysts expecting €84.36 billion, and a growth of approximately 8.8% in 2023. Fourth-quarter revenue was €23.93 billion, a year-on-year decrease of 0.08%, with analysts expecting €23.43 billion, and a year-on-year decline of 3% in the third quarter.
Organic Growth: Organic growth for 2024 was 1%, with analysts expecting a decline of 1.26%, and organic growth of 13% in 2023. Organic revenue growth in the fourth quarter was 1%, with zero organic revenue growth in the first three quarters.
Net Profit: Net profit for 2024 was €12.55 billion, a year-on-year decrease of 17%. In 2023, it grew by approximately 6.6%, with profit from recurring operations at €19.571 billion, a year-on-year decrease of 14%, and a growth of 8.2% in 2023.
</blockquote>
2) Segment Business Data:
<blockquote>
Fashion and Leather Goods: Revenue for the fashion and leather goods segment in 2024 was €41.06 billion, a year-on-year decrease of 3%, with organic revenue down 1%, compared to a year-on-year growth of 9% and organic growth of 14% in 2023. Fourth-quarter revenue was €11.14 billion, with analysts expecting €10.915 billion, and organic revenue down 1% for the quarter, with analysts expecting a decline of 2.82%, and a 5% decline in the third quarter.
Selective Retailing: Revenue for the selective retailing segment in 2024 was €18.262 billion, a year-on-year increase of 2%, with organic growth of 6%, compared to growth of 20% and 25% in 2023.
Watches and Jewelry: Revenue for the watches and jewelry segment in 2024 was €10.577 billion, a year-on-year decrease of 3%, with organic revenue down 2%, compared to growth of 3% and 7% in 2023.
Perfumes and Cosmetics: Revenue for the perfumes and cosmetics segment in 2024 was €8.418 billion, a year-on-year increase of 2%, with organic growth of 4%, compared to growth of 7% and 11% in 2023.
Wines and Spirits: Revenue for the wines and spirits segment in 2024 was €5.862 billion, a year-on-year decrease of 11%, with organic revenue down 8%, and declines of 7% and 4% respectively in 2024, with organic revenue down 8% in the fourth quarter, and analysts expecting a decline of 6.94%.
</blockquote>
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/83a06a2a-067f-44eb-8f8e-f4f8720252ba.jpeg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/83a06a2a-067f-44eb-8f8e-f4f8720252ba.jpeg"/>
3) Segment Market Data:
<blockquote>
Asia Excluding Japan: In 2024, the Asia region excluding Japan contributed 28% of LVMH's revenue, down from 31% in 2023, with organic revenue in this region decreasing by 11% year-on-year compared to 2023, including a 10% decline in the fourth quarter and a 16% decline in the third quarter
Japan: In 2024, the Japanese market contributed 9% of LVMH's revenue, up from 7% in 2023. The organic revenue in this region grew by 28% year-on-year in 2024, with a growth of 8% in the fourth quarter and 20% in the third quarter.
Europe: In 2024, the European market contributed 25% of LVMH's revenue, unchanged from 2023. The organic revenue in this region grew by 3% year-on-year in 2024, with a growth of 4% in the fourth quarter and 2% in the third quarter.
United States: In 2024, the U.S. market contributed 25% of LVMH's revenue, unchanged from 2023. The organic revenue in this region grew by 2% year-on-year in 2024, with a growth of 3% in the fourth quarter and zero growth in the third quarter.
</blockquote>
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/938ba163-8bda-4d48-80a5-347313cebfa8.jpeg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/938ba163-8bda-4d48-80a5-347313cebfa8.jpeg"/>
After the earnings report was released, LVMH's stock decline in the U.S. market narrowed. At the end of the early trading session, the stock had dropped 8.5% when it hit a daily low, but the midday decline was less than 3%.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/6cbe690c-548a-4ae3-9fd6-7d9b040b92d4.jpeg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/6cbe690c-548a-4ae3-9fd6-7d9b040b92d4.jpeg"/>
<h2>Under Economic and Geopolitical Challenges, Revenue Decline in 2024 is Lower than Expected, Organic Revenue Increases Instead of Decreases</h2>
The earnings report shows that LVMH's revenue and net profit in 2024 both fell from the record high set in 2023, but the decline was not as significant as Wall Street had anticipated. Revenue is expected to decrease by nearly 2% compared to 2023, while analysts had projected a decline of over 2%. Moreover, organic revenue unexpectedly recorded a positive growth of 1%, contrary to analysts' expectations of a negative growth of over 1%. Although the growth rate has significantly slowed from 13% in 2023, it reflects the impact of the broader environment.
LVMH pointed out at the beginning of the earnings announcement that the economic and geopolitical environment in 2024 poses challenges, along with the high growth base affected by several years of the COVID-19 pandemic. Nevertheless, the company still maintained organic positive growth.
LVMH's Chairman and CEO Bernard Arnault commented that the performance in 2024 demonstrates the company's resilience in an uncertain economic environment.
Arnault stated, &#34;In 2024, amidst an environment full of uncertainties, LVMH has shown strong resilience. This ability to weather storms during turbulent times—proven multiple times throughout our group's history—once again affirms the strength and relevance of our strategy.&#34; He attributed last year's performance to LVMH's &#34;creativity and high quality of products, our steadfast commitment to excellence, the agility of our team,&#34; and a good geographical balance across different regional markets.
Although the geopolitical and macroeconomic environment remains unclear, LVMH expressed full confidence in its performance for 2025 and will continue to implement a brand development-focused strategy, ongoing innovation and investment, and strive to enhance the appeal and quality of its products while maintaining strict selection in product distribution
<h2>Yen depreciation drives 28% organic revenue growth for Japan market in 2024; strong consumption from Chinese tourists in Europe</h2>
By business segment, LVMH noted that its largest segment—fashion and leather goods, which includes brands such as Louis Vuitton (LV), Dior, Celine, and Fendi—showed stable business resilience in 2024, with recurring operating profit from this segment declining by 10% for the year, primarily due to exchange rate fluctuations.
By market, in 2024, Japan performed well in LVMH's major markets due to the impact of yen depreciation, achieving an organic growth of 28% for the year. However, in the second half of the year, as the yen rebounded strongly, growth significantly slowed, with an 8% growth rate in the fourth quarter being less than half of that in the third quarter, marking the slowest growth of the year, far below the 57% growth rate in the second quarter. LVMH's Chief Financial Officer mentioned in the third quarter earnings report that the poor performance in that quarter was mainly due to the strong yen leading to a slowdown in growth in Japan.
In Asia outside of Japan, including China—LVMH's largest overseas market—organic revenue saw negative growth in 2024, with the decline exceeding 10% in three of the four quarters, except for a 6% drop in the first quarter. However, LVMH pointed out that spending by Chinese customers in Japan and Europe grew strongly. In other words, overseas consumption by Chinese tourists still strongly supported LVMH's performance.
<h2>Following Richemont's record Q4 sales, LVMH also signals positive industry outlook</h2>
Wall Street Journal previously mentioned that after two years of rapid growth following the outbreak of COVID-19, luxury goods consumption has continued to cool. In the first half of 2024, several European luxury brands issued warnings about demand in the Chinese market. However, as a barometer for the broader luxury goods industry, LVMH's financial report has raised hopes for industry recovery.
Earlier this month, LVMH's rival, Swiss Richemont Group, reported record quarterly sales in Q4, reflecting a resurgence in consumer spending during the year-end holiday shopping season. Last Friday, British luxury brand Burberry reported a third-quarter sales decline that was lower than expected.
Before LVMH released its financial report, analysts at Jefferies noted in a report released on Monday that given LVMH's diverse business across categories such as wine and spirits, fashion, leather goods, watches, jewelry, cosmetics, and perfumes, the group's performance would provide &#34;a better indicator of broader luxury trends.&#34;

LVMUY

In the face of economic and geopolitical challenges, LVMH's revenue in 2024 decreased by nearly 2% compared to the previous year, a decline that was lower than analysts' expectations, with organic revenue growth of 1%, not falling more than 1% as analysts had anticipated; the depreciation of the yen drove organic revenue growth of 28% in the Japanese market for the entire year, and LVMH stated that consumption by Chinese tourists in Japan and Europe showed strong growth. LVMH's performance has been described as the strongest signal so far that the high-end luxury goods industry may be recovering

- LVMH reported a revenue of €84.68 billion for 2024, a 1.7% decline from 2023, but managed to achieve a surprising organic growth of 1%.  
- The company faced economic challenges yet demonstrated resilience, particularly in the Japanese market, which saw a 28% organic growth due to yen depreciation.  
- Despite a decrease in net profit by 17%, LVMH's performance signals potential recovery in the luxury goods sector, bolstered by strong consumer spending from Chinese tourists in Japan and Europe.

Wallstreetcn

Louis Vuitton

Is the luxury goods industry poised for a turnaround? Withstanding the impact of the economic environment, LVMH unexpectedly sees organic growth in 2024 | Financial Report Insights