# Analysis-LVMH’s caution points to Americans’ waning lust for luxury Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-04-13 Category: LIFESTYLE Category URL: https://financedigest.com/category/lifestyle Meta Title: Luxury Fashion Sales Slow in US - Impact of Post-Pandemic Meta Description: Discover why luxury fashion sales in the U.S. are slowing down after a strong post-pandemic splurge, impacting LVMH and other high-end brands. URL: https://financedigest.com/analysis-lvmhs-caution-points-to-americans-waning-lust-for-luxuryhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-04-13t141703z1lynxmpej3c0l8rtroptp4france-lvmh-labor-1736814158798-compressed.jpg) By Mimosa Spencer PARIS (Reuters) – Luxury shoppers in the United States are curtailing purchases of high-end fashion and leather goods, LVMH’s first-quarter sales report showed, adding to evidence that a strong, months-long, post-pandemic splurge may be ending. Shares in Europe’s most valuable listed company rose nearly 5% to record highs in early trade on Thursday after it reported a 17% jump in sales, thanks to a sharp rebound in China following the end of COVID-19 lockdowns. \[.EU\] U.S. revenue grew 8% over the quarter but the French group’s [finance chief Jean-Jacques Guiony said most of that was down to brisk business](https://www.financedigest.com/6-ways-to-spring-clean-your-business-finances.html "6 ways to Spring clean your business finances") at its less exclusive Sephora beauty chain. For the rest, the business is slowing down a bit,” he said, citing [softer demand](https://www.financedigest.com/aussie-supermarkets-set-to-capitalise-on-high-inflation-but-softer-demand-ahead.html "Aussie supermarkets set to capitalise on high inflation, but softer demand ahead") for fashion and leather goods – where sales to U.S. shoppers both at home and abroad were “flattish” – as well as jewellery. Maybe [interest rate](https://www.financedigest.com/ecbs-centeno-says-interest-rate-close-to-peaking-if-no-new-shocks.html "ECB’s Centeno says interest rate close to peaking if no new shocks") rises are taking their toll on spending,” Guiony said. European labels including LVMH’s Louis Vuitton and Dior, as well as Chanel and Hermes have been riding a wave of [strong demand](https://www.financedigest.com/produced-water-treatment-systems-market-fuelled-by-strong-demand-in-north-america.html "Produced Water Treatment Systems Market Fuelled by Strong Demand in North America") from Americans, who emerged from lockdowns with savings and a desire to splash out on designer labels. LVMH’s U.S. [sales grew 15% last year](https://www.financedigest.com/uk-new-car-sales-rise-in-january-full-year-sales-to-top-last-year-smmt.html "UK new car sales rise in January, full-year sales to top last year – SMMT"), and the U.S. market accounted for 27% of overall revenue, as shoppers shrugged off [rising prices](https://www.financedigest.com/bitcoin-price-rises-past-50000-as-rebound-continues.html "Bitcoin price rises past ,000 as rebound continues") and turbulent markets. High [demand prompted](https://www.financedigest.com/pent-up-demand-prompts-european-travel-recovery-as-covid-curbs-ease.html "Pent-up demand prompts European travel recovery as COVID curbs ease") a flurry of investments, with brands including rivals Hermes and Kering-owned Gucci opening new retail spaces in sprawling malls like American Dream in New Jersey and South Coast Plaza shopping centre in California, and in cities like Austin, Texas. But the [spending spree from shoppers is beginning to show signs of slowing](https://www.financedigest.com/office-workers-waste-more-time-on-slow-tech-than-they-spend-on-holiday.html "Office Workers Waste More Time on Slow Tech Than They Spend on Holiday"). Credit [card data from Citi released](https://www.financedigest.com/king-charles-releases-photo-for-first-christmas-card-as-monarch.html "King Charles releases photo for first Christmas card as monarch") this week showed that U.S. luxury spending in March declined to the lowest monthly [rate in nearly three years](https://www.financedigest.com/bank-of-england-poised-to-raise-rates-by-most-in-33-years.html "Bank of England poised to raise rates by most in 33 years"), down 18% as fewer people splashed out on high-end goods. Younger shoppers, who drew on [savings during lockdowns are now under more pressure from rising prices than older generations with higher](https://www.financedigest.com/five-reasons-to-start-saving-early-for-higher-education.html "Five Reasons to Start Saving Early for Higher Education") incomes, Citi analysts said. LVMH [shares have doubled](https://www.financedigest.com/permitted-share-of-chinas-yuan-in-russian-wealth-fund-doubled-to-60-finance-minister.html "Permitted share of China’s yuan in Russian wealth fund doubled to 60% -Finance Minister") in 3 years, https://fingfx.thomsonreuters.com/gfx/mkt/egpbyljmevq/lvmh.PNG ![](https://onlineworldnews.com/wp-content/uploads/2023/04/lvmh.jpg) BIGGEST BEAR STORY The [United States](https://www.financedigest.com/united-states-to-account-for-30-of-global-reinforced-thermoplastic-pipes-market-demand-through-2031.html "United States to Account for 30% of Global Reinforced Thermoplastic Pipes Market Demand Through 2031") is “the biggest bear story” in the luxury sector, HSBC said in a recent note, though it cautioned fears of a sharp downturn may be exaggerated. “(The) softer U.S. [consumer is an important caution](https://www.financedigest.com/ups-shares-fall-as-consumer-caution-dims-e-commerce-outlook.html "UPS shares fall as consumer caution dims e-commerce outlook") point,” said Oliver Chen, an analyst with Cowen, flagging possible risks for Tapestry and Versace owner Capri due to their exposure to the handbags segment. LVMH saw a particular slowdown in U.S. demand for its Hennessy cognac, as a steep price increase, meant to offset [rising energy](https://www.financedigest.com/germanys-bakeries-burnt-by-rising-energy-prices.html "Germany’s bakeries burnt by rising energy prices") and glass costs, were “probably a bit difficult to absorb by some clients”, Guiony said. He added the group is taking a [cautious approach to price increases](https://www.financedigest.com/should-we-be-more-cautious-about-contactless-1-in-4-young-adults-with-contactless-cards-say-theyve-increased-their-spending.html "Should we be more cautious about contactless? 1 in 4 young adults with contactless cards say they’ve increased their spending") this year — not just for cognac. LVMH will also soon show off a hefty investment in U.S. jewellery group Tiffany, which it bought for $16 billion in 2021, with the reopening of the New [York flagship store after three years](https://www.financedigest.com/london-takes-aim-at-new-york-with-five-year-financial-plan.html "London takes aim at New York with five-year financial plan") of renovation. The store, which [accounted for around](https://www.financedigest.com/5-common-mistakes-around-accounts-payable-automation.html "5 Common Mistakes Around Accounts Payable Automation") 10% of Tiffany sales before closing for the refurbishment, is likely to reopen near the end of the month. It’s probably the most emblematic [luxury store in the world,”](https://www.financedigest.com/top-luxury-car-brands-in-the-world.html "Top luxury car brands in the world") said Guiony. He said that developing Tiffany’s [sales through product innovation and expanding and renovating stores](https://www.financedigest.com/ikea-stores-owner-ingka-says-campaigns-help-boost-store-visits-and-sales.html "IKEA stores owner Ingka says campaigns help boost store visits and sales") would be a priority, while margin expansion would likely kick in at a later stage, in a strategy similar to that it applied to Bulgari. Elliott Savage, [portfolio manager](https://www.financedigest.com/ramboll-is-to-scale-project-portfolio-management-reporting-with-insight.html "Ramboll Is To Scale Project Portfolio Management Reporting With Insight") of U.S.-based fund YCG Investments, which holds shares in LVMH and other [luxury brands](https://www.financedigest.com/loreal-buys-luxury-brand-aesop-with-eye-on-china.html "L’Oreal buys luxury brand Aesop with eye on China"), said a weakening U.S. luxury market in the near term could [present an opportunity](https://www.financedigest.com/the-rise-of-finfluencers-presents-unique-opportunities-but-brands-must-proceed-with-caution.html "The rise of “Finfluencers” presents unique opportunities but brands must proceed with caution") for dominant players to take market share. It could actually end up being better (for LVMH) in [terms of strengthening their position,”](https://www.financedigest.com/automotive-glass-market-to-witness-sales-slump-in-near-term-due-to-covid-19-long-term-outlook-remains-positive.html "Automotive Glass Market to Witness Sales Slump in Near Term Due to COVID-19; Long-term Outlook Remains Positive") Savage told Reuters. LVMH’s luxury divisions, which span fashion, leather goods, watches and jewellery, have been gaining on rivals in recent years, almost doubling their [global market share](https://www.financedigest.com/global-share-markets-rise-bonds-fall-on-u-s-jobs-data.html "Global share markets rise, bonds fall on U.S. jobs data") to 22% from 12% between 2018-2023, according to Jefferies. Many high-end labels are still moving further upmarket and rolling out new services for their wealthiest clients, seen as more resilient to [economic headwinds](https://www.financedigest.com/switch-from-gas-boosts-oil-demand-but-economic-headwinds-loom-iea.html "Switch from gas boosts oil demand, but economic headwinds loom – IEA"). [Gucci this week opened a salon](https://www.financedigest.com/gucci-banks-on-private-salons-for-the-ultra-rich-to-revive-sales.html "Gucci banks on private ‘salons’ for the ultra-rich to revive sales") catering to high-end clients in Melrose Place in Los Angeles where red carpet-ready evening wear is displayed on mirrored pedestals. The group plans to [open nine more similar boutiques including in New York](https://www.financedigest.com/open-banking-pioneer-the-id-co-selected-for-uk-fintech-trade-mission-to-new-york.html "Open banking pioneer The ID CO. selected for UK fintech trade mission to New York") and Shanghai. (Reporting by Mimosa Spencer and Silvia Aloisi; Editing by Emelia Sithole-Matarise) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---