The trade war threatens high-end consumption, LVMH's revenue in the first quarter decreased instead of increasing, with core business revenue unexpectedly falling by 5% | Financial Report Insights

The first quarter earnings season for European luxury giants did not start off well. The world's largest luxury goods group, LVMH, reported a decline in total revenue for the first quarter, with core business revenue falling more than expected. The threat of trade wars is not only affecting ordinary consumers but also causing high-end luxury buyers to become more cautious in their spending, which is a warning signal from LVMH. On April 14th, local time, the France-based LVMH Group announced that its total operating revenue for the first quarter of 2025 was €20.311 billion, lower than analysts' expectations of €21.14 billion. In the first quarter, LVMH experienced a 3% decline in organic revenue, relying on existing internal resources rather than external acquisitions. After an unexpected 1% growth in organic revenue last year, organic revenue has turned negative, while analysts had expected a 1.1% increase. During the earnings call following the report, LVMH's management stated that the group would consider price increases to cope with U.S. tariffs. They are working to control G&A (general and administrative expenses) and have room to adjust marketing costs. The group expressed confusion regarding U.S. President Trump's announcement to delay the implementation of certain tariffs for 90 days. By business segment, LVMH's core business—fashion and leather goods—saw a decline that exceeded expectations, with a drop five times greater than last year's, far surpassing analysts' forecasts. The second-largest business, selective retailing, which had the highest growth last year, also turned to organic revenue growth. The detailed business segment data is as follows: Fashion and Leather Goods: In the first quarter, the fashion and leather goods segment generated revenue of €10.108 billion, with organic revenue declining by 5%, while analysts expected a decline of 0.55%. Organic revenue for the full year of 2024 and the fourth quarter both decreased by 1%. Selective Retailing: In the first quarter, the selective retailing segment reported revenue of €4.189 billion, with organic revenue declining by 1%, while organic revenue is expected to grow by 6% in 2024. Watches and Jewelry: In the first quarter, the watches and jewelry segment generated revenue of €2.482 billion, with organic revenue remaining flat, while organic revenue is expected to decline by 2% in 2024. Perfumes and Cosmetics: In the first quarter, the perfumes and cosmetics segment reported revenue of €2.178 billion, with organic revenue declining by 1%, while organic revenue is expected to grow by 4% in 2024. Wines and Spirits: In the first quarter, the wines and spirits segment generated revenue of €1.305 billion, with organic revenue declining by 9%, while organic revenue is expected to decline by 8% in 2024. By market, LVMH's revenue in the European market maintained positive growth, while organic revenue in the U.S. market, which had zero growth last year, declined by 3% in the first quarter, contrary to analysts' expectations of a 1.19% increase. The Japanese market also turned to negative growth in the first quarter, which LVMH attributed to a base effect, as last year's first-quarter revenue was strongly supported by Chinese tourists' spending in Japan. At the same time, in the market that contributes the most to LVMH's revenue—other Asian regions including China—organic revenue failed to alleviate the double-digit decline. Including China, organic revenue in Asian regions outside Japan declined by 11% in the first quarter, matching last year's decline level and exceeding analysts' expectations of a 4.69% decline. Following the earnings report, LVMH's U.S. stock price quickly expanded its decline, hitting a daily low of $109.90 towards the end of the early trading session, down nearly 9.4% for the day