Eighteen months ago, the stock price of LVMH Group, the world's largest luxury goods conglomerate, reached an all-time high, and its controlling shareholder, Bernard Arnault, briefly became the richest person in the world. However, as demand for high-end fashion products such as Louis Vuitton bags and Dior dresses declined in China, LVMH's market value has evaporated by over €150 billion (approximately $163 billion). Arnault's wealth has also shrunk, dropping to the fifth position in the Bloomberg Billionaires Index. The index also shows that his wealth loss during this period reached $37 billion, making him the person with the highest loss among the world's top 500 billionaires.
Today, the 75-year-old French founder has a net worth of approximately $174.5 billion, still leading Bill Gates, but far behind the top-ranked Elon Musk and other tech industry billionaires, whose wealth has increased by tens of billions of dollars this year.
The global economic downturn has shattered the luxury market's hope for a "soft landing," and investors are now concerned about how long the downturn will last and whether the future recovery can return to the prosperity of the past. On Tuesday, LVMH reported its third-quarter financial results, showing that due to reduced consumer spending in China and the strengthening of the yen, the performance of all major divisions did not meet expectations, and quarterly revenue experienced its first decline since the pandemic, with core division sales "dropping for the first time in four years."
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In particular, organic sales in Asia (excluding Japan) decreased by 16% in the third quarter, exceeding expectations. This is the third consecutive quarter of negative growth for LVMH. Even the sales growth in the second-largest market, the United States, has stalled. The company's vague performance guidance provided to investors has caused unease.
LVMH's Chief Financial Officer, Jean-Jacques Guiony, said on Tuesday when asked about the outlook: "I don't know. We've had ups and downs, and the only thing we know is that when business is bad, it usually gets better afterward. This is a cyclical industry."
As a barometer for the entire industry, LVMH's sales may indicate that the performance of other competitors such as Brunello, Hermès, Kering Group, and L'Oréal will decline, and these companies will announce their financial reports this week and next week.
After the financial report was released on Tuesday, LVMH Group's stocks plummeted by more than 10.3% during the US trading session, eventually closing down by 7.94%, dragging down the luxury concept stocks collectively. On Wednesday, when the European stocks closed, LVMH Group's stocks fell by nearly 7.5% at one point and eventually closed down by 3.68%, L'Oréal fell by up to 3.68%, Hermès fell by 1.34%, and Kering Group fell by 0.82%.