LVMH Shares Slip as Fashion & Leather Goods Growth Misses Market Expectations

Shares of French luxury group LVMH fell 1.5% after the company reported second quarter results that failed to fully reassure investors about a recovery in its key fashion and leather goods business.

The division, which includes major brands such as Louis Vuitton and Dior, recorded 1% organic sales growth to €8.90 billion during the quarter. While this was the first quarterly increase for the business in two years, it was below analysts' expectations of 1.7% growth.

LVMH reported overall organic sales growth of 3%, supported by strong performance in its watches and jewellery division, where sales increased 11%, making it the company's fastest-growing business during the quarter.

Despite the positive signs, investors remained cautious. LVMH shares have fallen about 30% this year and are trading close to six-year lows as concerns over weak global luxury demand continue.

Several financial institutions, including UBS, RBC and Morgan Stanley, lowered their target prices for LVMH shares after the results. Analysts said the figures were encouraging but not strong enough to confirm a sustained recovery in the luxury sector.

The company also said that tourism related spending in Europe was affected by the conflict between Israel and Iran, reducing purchases by international visitors in the region.

Meanwhile, LVMH's wines and spirits business posted 5% organic growth, while its watches and jewellery division delivered the strongest performance of all business segments. Investors are now looking ahead to earnings announcements from rival luxury groups Kering and Hermès, which are expected later this week.