On October 15th, French conglomerate and multinational holding company, LVMH Moet Hennessy Louis Vuitton, announced a 3% decline in their sales in the recent third quarter, dissipating the figure given by Barclays of the predicted 2% organic growth. More specifically, the key fashion and leather goods unit, which makes up about half of its revenue, reported a 5% decline in sales – however, financial analysts had also expected growth in this unit of approximately 0.5%. In addition to Louis Vuitton and Moët Hennessy, LVMH's portfolio includes Dior, Givenchy, Fendi, Celine, Kenzo, and Tiffany, to name a few. This decline in sales can be attributed to a variety of factors, with the primary reason being the significant slowdown in sales within the Chinese luxury sector. For the majority of the part, this sector had been the largest contributor to the growth and demand for these goods, particularly since the start of the COVID-19 pandemic, when spending on luxury goods in China surged to its highest levels. However, for the first time since the early stages of the pandemic, this integral market is experiencing a noticeable decline in consumer demand, which is leading to a broader impact on overall sales within this industry.

Since 2021, China's stock market has been struggling due to a variety of factors: the country’s aggressive zero-COVID policies, a real estate crash, and debt crisis, among others. The targeted consumers of luxury goods in China have slowed down spending on these luxury goods over the remarkably slow economic growth the Chinese economy has been experiencing recently – they are understandably worried about how they should truly be rationing what may come to be their rather limited financial resources. Many analysts believe that if the Chinese property market can regain investment from domestic consumers again, a resurgence in demand for luxury goods will be reflected in future sales figures.

The Chinese government, last month, announced measures to restore confidence in the Chinese economy for investors once again – many of these stimulus measures include monetary policies to bolster spending, as well as making borrowing easier for consumers if a high demand for loans can be seen. LVMH investors are hoping these measures prove effective enough to appeal to the upper-middle class in China, who are expected to drive the next wave of demand to bring sales back up to match expectations. 

To reiterate this, analysts predict that sales for all luxury goods will increase in China, with the largest acceleration being seen in 2025. To achieve this, LVMH has taken a series of steps to ensure a more successful sales quarter than the one documented most recently. In 2019, they partnered with the Chinese e-commerce giant, Alibaba, to increase the online presence of luxury goods in an increasingly technologically-reliant world. As of May of this year, LVMH has deepened this partnership even further in response to the weakened demand for their goods in China due to the property crisis and high youth unemployment.  Additionally, LVMH's travel retail unit, DFS Group, is building a major shopping and entertainment complex on Hainan Island, a Chinese province best known amongst corporations for its lack of tax on goods.

Looking ahead, LVMH's efforts to increase its presence in China, alongside the hopeful economic recovery measures implemented by the Chinese government, will be essential in determining the company's future growth within the luxury sector.