French luxury goods giant LVMH Moët Hennessy Louis Vuitton has reported surprising growth at the end of 2024, contrary to market expectations. According to figures released on January 28, 2025, the company achieved a revenue increase of 1% year-on-year during the fourth quarter, ringing up €84.7 billion for the full year. This rise occurred amid expectations from analysts surveyed by Bloomberg, who had anticipated a decline of 1% for the quarter.
The company’s performance came with its challenges, particularly reflected in its operating profit, which saw a notable decline of 14% to €19.6 billion, exceeding analysts' forecasts of a lesser drop. Likewise, net profit fell by 17% to €12.6 billion, raising questions about operational efficiency and cost control at the luxury powerhouse.
Despite these dips, LVMH's revenue growth negated the adverse effects of currency fluctuations and business divestitures, presenting a resilient front amid turbulent market conditions. Analysts were taken aback by the revenue uptick, noting it showed the brand’s strength across different sectors, yet caution remains prevalent due to the declining profit margins.
Analyzing the revenue structure reveals how LVMH's brand portfolio continues to dominate the luxury market. The fashion and leather goods segment accounted for nearly half (48.9%) of total revenue, featuring iconic brands such as Louis Vuitton, Givenchy, and Fendi. The watches and jewelry division contributed 12.8%, with labels like TAG Heuer and Tiffany leading the charge. Surprisingly, the perfumes and cosmetics category was responsible for 9.6% of the revenue, showcasing brands like Dior and Guerlain.
Regionally, LVMH's sales distribution was broad and diversified: France generated 7.9% of sales, followed by other regions including Europe (16.4%), Japan (7.3%), Asia (30.8%), and the United States (25.3%). This geographical spread underlines the global demand for luxury products, but it also opens the conversation about regional economic pressures and market saturation.
Investors have shown mixed feelings about LVMH's stock. On January 28, the share price dipped by 0.94%, closing the day at €749.90. Nonetheless, leading up to these quarterly results, the stock saw impressive growth, outpacing the significant decreases recorded previously. This reflected a monthly increase of 21.15%, even with the current fluctuations. Market speculation about LVMH's strategy following the recent announcements has piqued interest among analysts and shareholders alike.
Investment firms provided varied outlooks post-earnings release. Morgan Stanley issued a 'buy' recommendation earlier, which caused immediate positive momentum for LVMH's stock. Meanwhile, Jefferies raised its price target from €560 to €670, keeping the 'hold' status. Analysts noted the importance of adapting to shifting consumer preferences and the challenges posed by increased operational costs.
Despite some caution over profit declines, analysts like James Grzinic at Jefferies remarked, "The luxury sector, including segments like fashion and leather goods at LVMH, has shown signs of stronger recovery than reflected in consensus estimates."
The announcement also included news of LVMH’s decision to sell its minority stake back to Stella McCartney, signaling strategic adjustments within its portfolio. This move aligns with LVMH's strategy to streamline operations and focus on core brands thought to yield higher profits.
Investor sentiment following these revelations remains cautious yet hopeful, with the consensus leaning toward holding positions over aggressive buying or selling. The luxury conglomerate faces both challenges and growth opportunities as it transitions through 2025.
Stock price fluctuations and the overall economic climate will continue to exert pressure on LVMH's operations. Their next moves, especially as related to product offerings and market engagement, will be closely analyzed by industry observers and retail investors alike.