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Investing.com - The ADRs of luxury goods maker LVMH Moet Hennessy Louis Vuitton SA (EPA:LVMH) ADR (OTC:LVMUY) fell more than 6% on Monday after the company reported that total first quarter organic sales fell 3% to EUR 20.311 billion. Analysts had expected growth of 2%.
"Europe once again achieved growth on a constant consolidation scope and currency basis," the company stated. "The United States saw a slight decline, despite a good performance in Fashion & Leather Goods and in Watches & Jewelry. Japan was down with respect to the first quarter of 2024, which had been boosted by strong growth in Chinese consumer spending in the country. The rest of Asia saw trends comparable to 2024."
Sales in its all-important fashion & Leather Goods segment fell 5% to EUR 10.108 billion.
Sales in the Wines & Spirits group fell 9%. Champagne was down slightly, while Cognac was held back by weaker demand in China and the United States.
The Perfumes & Cosmetics business group saw sales fall 1% organically.
The Watches & Jewelry business group saw sales flat on a year-over-year basis.
In Selective Retailing, sales were down 1% on an organic basis.
Morgan Stanley (NYSE:MS) analysts downgraded LVMH shares to Equal Weight after the report, noting they expect another decline in sales for the second quarter of 2025. They forecast organic sales growth of -3%, down from a previous estimate of +2%.
If this projection materializes, it would mark the first time in over three decades that the Fragrance & Luxury Goods division records four consecutive quarters of sales contraction.
"The difference this time is that demand from China is a major drag and the industry is now facing a softer macro environment worldwide after having raised prices significantly,
unlike in 2008 & 2009 and unlike in 2020," Morgan Stanley analysts said in a note.
"Hence we expect LVMH and industry top line is likely to remain anemic over the next 12 months," they added.