China boycott: LVMH fashion division loses five percent in the third quarter
Louis Vuitton's trademark fight with Chinese tea chain Molly Tea has left its mark: the luxury group's fashion and leather goods division shrank five percent on an organic basis.
Symbolic image · Photo: Heights / Wikimedia Commons, CC BY-SA 3.0 (cropped and resized)
French luxury group LVMH reported its third-quarter figures on 12 October. Group revenue rose by just over one percent to 18.5 billion euros and, on an organic basis, fell short of average analyst expectations, dpa reported. The key fashion and leather goods division, home to Louis Vuitton and Dior, fell five percent to 8.245 billion euros. Watches and jewellery, by contrast, grew five percent and the Sephora business eight percent, the Seoul Economic Daily reported, citing The Wall Street Journal.
The main reason is weak demand in China. Many consumers there boycotted Louis Vuitton in July and August after the brand won a trademark case against milk tea chain Molly Tea. Louis Vuitton had argued that the chain's logo resembled its own monogram. Asia excluding Japan was the only region to decline, down five percent. Chief financial officer Cécile Cabanis said the impact was hard to quantify, according to Bloomberg: "The news flow has not been particularly good in China in the summer."
In the United States, customer spending rose by a mid-single-digit percentage, and overall demand improved later in the quarter. "We need to do more, but we have not stopped investing in China," Cabanis said. LVMH shares fell more than two percent on Tradegate after the release and have lost over 40 percent since the start of the year.