According to the China Finance app, global luxury goods industry leader LVMH Moët Hennessy Louis Vuitton (LVMUY.US) announced its third-quarter financial performance on Tuesday, facing its worst quarterly performance since the global epidemic in Q2 2020. The group's Q3 overall sales declined by 3%, with fashion and leather goods sales declining for the first time since the epidemic. The group's key brands include Louis Vuitton and Christian Dior, with organic revenue in the third quarter declining by 5%, contrary to analysts' expectations of a slight increase.

LVMH is operated and controlled by one of the wealthiest individuals in the world, Bernard Arnault, owning approximately 75 luxury brands covering fashion, jewelry, hotels, and spirits. All major business segments of the group fell short of analysts' expectations in the third quarter.

Headquartered in Paris, the group's American Depositary Receipts plummeted 10% intraday after the financial report was released, then narrowing to an 8% decline. US competitors like Ralph Lauren and Estee Lauder, as well as the American Depositary Receipts of Gucci's parent company Kering (PPRUY.US), also experienced significant drops.

The decline in Chinese consumer demand is one of the factors contributing to this poor financial performance, as the previous high-end product demand from Chinese consumers seemed unfulfilled. LVMH's Chief Financial Officer, Jean-Jacques Guiony, stated in the quarterly report: "Most of our markets are currently facing demand challenges, including mainland China."

Piral Dadhania, a Capital Markets Analyst at Royal Bank of Canada, mentioned in a report that this result "suggests a greater extent of economic slowdown than expected."

Due to concerns about slowing economic growth and the real estate market, Chinese consumers have been exerting control over spending on expensive items, prompting the Chinese government to announce a package of measures last month to boost the economy. Guiony mentioned that it is currently difficult to assess the potential impact of such measures on demand, but "it shows that the Chinese government values this issue greatly."

In this quarter, LVMH's organic sales in the Asia region, including china, fell by 16%, exceeding expectations. LVMH has always been one of the most resilient groups facing the cooling demand in china, and the significant decline in performance this time is disappointing.

In addition, sales performance in the japan market fell short of expectations, as the strengthening of the yen dampened chinese consumer spending on luxury goods in japan. The performance in the usa and europe was also disappointing.

Last year, the consumer enthusiasm that drove luxury goods sales during the pandemic lost momentum, especially for brands that cater to the so-called aspirational consumers. High-end brands like Hermes International have weathered the downturn relatively well, and the company will announce quarterly sales next week.