The French-based luxury conglomerate has posted a 14% year-on-year fall in first half net profit amid an uncertain macroeconomic environment. Fashion & Leather Goods division hit by currency fluctuations By World Footwear.

“The results for the first half of the year reflect LVMH’s remarkable resilience, backed by the strength of its Maisons and the responsiveness of its teams in a climate of economic and geopolitical uncertainty”, commented Bernard Arnault, Chairman and CEO of LVMH.

In the first half of fiscal year 2024, the company recorded a revenue of 41.7 billion euros, an increase of 2% in organic terms, but a decrease of 1% on a reported basis, as compared to the same period of last year. In the second quarter alone, organic revenue growth was 1%, suggesting a slowdown from the first quarter, when organic revenue increased by 3%.

Although Europe and the United States grew on a constant scope and currency basis and Japan achieved double-digit sales growth, weak sales in China remain a weak spot for the group.

LVMH also reported an 8% decline in profit from recurring operations in the six months to the end of June to 10.7 billion euros, on a comparable basis to the same period of 2023. However, the operating margin was 25.6%, exceeding pre-Covid levels, the group pointed out.

Overall, exchange rate fluctuations had a substantial negative impact in the first half of the current year. The group’s net profit came in at 7.3 billion euros, a 14% decrease as compared to the same period of the previous year.

Nevertheless, “while remaining vigilant in the current context, the Group approaches the second half of the year with confidence and will count on the agility and talent of its teams to further strengthen its global leadership position in luxury goods in 2024”, concluded Arnault.

Fashion & Leather Goods

The luxury conglomerate highlighted the “substantial negative impact of exchange rate fluctuations, particularly on Fashion & Leather Goods”. This division recorded a revenue of 20.8 billion euros, down by 2% on a reported basis, but up by 1% on an organic basis. 

However, there was a slowdown from the 2% organic growth in the first quarter to the 1% in the second quarter.

In addition, profit from recurring operations fell by 6% year-on-year to 8.1 billion euros, but the operating margin remained at “historically high levels”.