LVMH Stock Slumps Despite Resilient Market Performance

LVMH stock saw a decline by over 2% after mixed quarterly results. Investors express concerns over stagnant revenue growth and falling profitability, indicating a need for improved performance in 2024.

Date: 29-01-2025

AI Rating: 4

Revenue and Profitability Insights

LVMH reported its fourth-quarter revenue as flat year-over-year at 23.9 billion euros ($25.1 billion). For the entirety of 2024, the total revenue was 84.7 billion euros ($88.8 billion), which marked a decrease of 2% compared to 2023. This decline in revenue coupled with a significant drop in profitability, which fell by 17% to under 12.6 billion euros ($13.2 billion), paints a troubling picture for investors.

The major product category, fashion and leather goods, witnessed a 3% slump, generating slightly over 41 billion euros ($43 billion) in 2024. Moreover, wines and spirits experienced a steep decline of 11%, contributing less than 5.8 billion euros ($6.1 billion). These figures highlight a concerning trend for LVMH, as major revenue streams contract.

Investor Sentiment

Despite the negative earnings report, LVMH's CEO Bernard Arnault emphasized the company’s resilience in a challenging environment. While some analysts had, in fact, anticipated even steeper declines, this lack of expectation met might not satisfy investors fully. The current sentiment indicates that shareholders are eager to see revenue growth alongside improved profitability metrics.

Potential Impact on Stock

The stagnation in revenue and the substantial decrease in profitability could lead to tighter investor confidence and a cautious outlook moving forward. Investors typically seek robust growth trajectories, and the slowdowns reported may compel them to reassess their positions in LVMH. This could exert downward pressure on stock prices further.

Stocks: LVMUY