LVMH was the first luxury company to report Q3 2024 quarterly results for the prestige luxury category, and the results were soft. The company's important Fashion & Leather Goods division saw a -5% decrease in organic revenue versus +1% growth in Q2 2024, which was due to Asian markets as the U.S. improved slightly quarter-over-quarter, or in the company's words, “down less.” The Selective Retailing division also experienced a large -300 basis point slowdown to +2% as Sephora slowed in the U.S. with the category (see our Ulta story above). Placer data shows Sephora visits increased +4% in September versus the prior double-digit growth trend, but that lower rate largely reflects the comparative base.
Looking at the recent trends for the more-affluent segment of U.S. department stores, we also see the stability in the U.S. that LVMH referenced. 2023 was already a difficult year for U.S. department stores, and so, it already has a more “normalized comp base" (shown below is the recent trend versus last year). Excluding the spike at the end of August, there isn’t much change in traffic growth this fall vs. summer. This view is further supported by bank/card management commentary which we touch on below. And so, we believe that the negative results from LVMH don’t reflect a weaker high-end consumer, but do reflect some pockets of ongoing normalization, especially in beauty after an ebullient post-pandemic rebound.
