LVMH shares fell sharply Wednesday, dragging down European luxury stocks after the Paris-based group delivered a muted holiday-quarter sales update and adopted a guarded tone on prospects.
The owner of Louis Vuitton and Dior dropped as much as 7% in early trading. The weakness extended across luxury names - Kering tumbled more than 3%, while Richemont, Hermes and Burberry each slipped in a range between about 1% and 2.5%. Salvatore Ferragamo fell roughly 6.3% after issuing its own year-end update late Tuesday.
LVMH reported 1% organic sales growth in the fourth quarter, a result that beat forecasts for a slight decline but nonetheless pointed to limited momentum. Its fashion and leather goods division - widely viewed as a key gauge of luxury demand - recorded a 3% drop in organic sales, underlining weakness in a core segment.
The earnings update sent mixed signals. On one hand, full-year earnings came in ahead of expectations. On the other, management emphasised persistent volatility in consumer demand and continued currency pressures, even as Dior showed some improvement during the period.
Chief executive Bernard Arnault adopted a cautious tone on the company call, warning of cross-currents affecting the business and saying: "With the continuing geopolitical crises, with economic uncertainty and the policies of certain states, including ours, to tax us to the maximum and create unemployment - I think there is reason to be a little cautious."
Analysts at Bernstein contrasted this update with the prior year, noting: "Contrary to last year - when Bernard Arnault provided a reassuring message on current trading - nobody dared to offer an indication this time." The firm highlighted the absence of the more comforting forward commentary that had been given previously.
While LVMH said sales in China rose during the quarter, that performance fell short of the brighter remarks made earlier in the month by peers Richemont and Burberry. Management also pointed to specific margin pressures, citing U.S. tariffs, a weaker dollar and softer demand as factors weighing on profitability.
Finance chief Cecile Cabanis said that a recovery in margins would hinge on reviving top-line growth, stressing: "We need growth, so we are going to focus on getting growth going again, and continuing to manage our costs."
The sector reaction highlights investor sensitivity to signs of cooling in high-end consumption and to commentary from management teams about demand uncertainty and currency effects. With multiple marquee brands seeing share-price declines, market participants are parsing sales mixes and margin trajectories for signals on when growth and profitability might normalise.