Core Viewpoint - The European high-end manufacturing industry, particularly luxury goods, is facing significant pressure due to U.S. tariff policies, leading to a decline in performance across various sectors [1][2]. Group 1: Impact on Luxury Goods - European luxury brands are experiencing a downturn, with LVMH reporting a revenue drop in its fashion and leather goods division from €299.2 billion to €276.1 billion, a decrease of approximately 8% year-on-year [2]. - Kering's revenue also fell by about 12% to €11 billion, with its flagship brand Gucci seeing a 22% decline in revenue [2]. - The high-end automotive sector is similarly affected, with Porsche's operating profit plummeting by approximately 99%, from €40.35 billion to €400 million [2]. Group 2: Swiss Watch Industry - The Swiss watch industry is under severe strain, with a 39% tariff imposed on Swiss watches leading to a 56% year-on-year drop in exports to the U.S. in September [3]. - Swatch Group, which includes brands like Omega, relies heavily on the U.S. market, which constitutes nearly 17% of its exports [3]. Group 3: Consumer Confidence in the U.S. - The U.S. market accounts for over 23% of global personal luxury goods sales, and the tariff pressures are causing European luxury brands to raise prices, which is dampening American consumer purchasing intent [4]. - Porsche and Swatch have announced price increases of 5% to 15% in the U.S. market, reflecting the industry's response to cost pressures [4]. - Experts indicate that consumer confidence is crucial for luxury spending, and uncertainty in the economic and policy environment is leading to a cautious approach among American consumers [4]. Group 4: Long-term Industry Uncertainty - While price increases may provide short-term relief, they pose long-term risks to brand image and consumer loyalty, potentially deterring younger customers [5]. - Some European luxury brands are exploring local production in the U.S. to avoid tariffs, but face challenges such as a lack of skilled labor and low production efficiency [5][6]. - Efforts to optimize supply chains to control costs are also costly and may jeopardize craftsmanship standards, contributing to significant uncertainty in the global high-end consumer market [6].

Core Insights - LVMH Group shows signs of performance stabilization with a 1% organic growth rate in Q3, despite challenges in the European market due to currency fluctuations [1][9] Financial Performance - In Q3, LVMH reported revenue of €18.28 billion, reflecting a 4% decline when accounting for a 5% negative currency impact [2] - The fashion and leather goods segment continued its decline, down 2% year-on-year, marking three consecutive quarters of decrease, although the decline rate has narrowed [2] - Wine and spirits revenue increased by 1% year-on-year, driven by restocking in the U.S. market and increased sales of rosé wine [2] - Other segments such as perfumes and cosmetics, watches and jewelry, and selective retailing saw revenue increases of 2%, 2%, and 7% respectively [2] Market Dynamics - The CFO highlighted strong local demand in key markets, particularly in the fashion and leather goods sector, with positive growth in mainland China and improvements in the U.S. market [4] - For the first nine months, LVMH achieved total revenue of €58.09 billion, with fashion and leather goods contributing €27.61 billion, approximately 47.5% of total revenue [5] - In terms of regional performance, the U.S. market saw a 3% year-on-year revenue increase, while Europe and Japan experienced declines of 2% and 13% respectively; Asia (excluding Japan) grew by 2% [6] China Market Insights - The company noted a recovery in the Chinese market, with local consumption showing mid-to-high single-digit positive growth, although overall consumer performance remains close to stable with low single-digit negative growth [9] - Despite challenges in the macroeconomic environment, demand in China is encouraging, although overseas spending by Chinese tourists is still experiencing double-digit declines [9] - The CFO indicated that the fourth quarter may present greater challenges due to base effects and anticipated stronger negative impacts from currency fluctuations compared to Q3 [9]