Financial Data and Key Metrics - Revenue for the first nine months of 2024 reached EUR60.8 billion, stable on an organic basis but down 2% on a reported basis due to a negative 2% currency impact and a negative 1% scope impact [4] - Wines and Spirits revenue decreased by 8% on an organic basis and 11% on a reported basis, with Champagne and Wines down 6% organically and Cognac and Spirits down 11% organically [7] - Fashion and Leather Goods revenue decreased by 1% on an organic basis and 3% on a reported basis [10] - Perfumes and Cosmetics revenue increased by 5% on an organic basis and 2% on a reported basis [14] - Watches and Jewelry revenue decreased by 3% on an organic basis and 5% on a reported basis [16] - Selective Retailing revenue increased by 6% on an organic basis and 1% on a reported basis [20] Business Line Performance - Wines and Spirits saw modest improvement in Champagne and Wines, with growth in Japan offsetting softness in Europe and the US [8] - Fashion and Leather Goods saw strong innovation from Louis Vuitton and Christian Dior, with new product launches and high-profile collaborations [10][11][12] - Perfumes and Cosmetics benefited from strong performance in fragrances, particularly from Parfums Christian Dior and Guerlain [14][15] - Watches and Jewelry saw resilience, with Tiffany expanding its product range and Bulgari celebrating its 140th anniversary [17][18] - Selective Retailing saw strong performance from Sephora, with market share gains in North America, Europe, and the Middle East [20] Market Performance - Europe and the US saw a 1-point increase in revenue mix, while Japan increased by 2 points and Asia fell by 3 points [4] - Chinese client purchases outside mainland China had a positive impact on Japan but a negative impact on the rest of Asia [5] - Demand from Chinese clientele remained dynamic in the first half but faced macroeconomic headwinds, while Western clientele showed gradual improvement [3][4] Strategic Direction and Industry Competition - The company emphasized product innovation as a key growth driver, leveraging its talent pool to translate creativity into commercial success [23] - Investments in distribution networks and communication were highlighted as important, with no need for acceleration in spending [23] - The company remains confident in the enduring appetite of Chinese consumers for luxury goods, expecting demand to recover when confidence improves [22][23] Management Commentary on Operating Environment and Future Outlook - Consumer confidence in mainland China is at an all-time low, similar to levels seen during COVID, impacting discretionary spending [22] - The company expects demand to recover in China when confidence improves, given the strong demand seen in the first half of the year [23] - The company is adjusting costs in response to the current environment but remains committed to long-term investments in innovation and distribution [23][24] Other Important Information - The company announced a strategic investment in French Bloom, a non-alcoholic sparkling wine producer [9] - Louis Vuitton was a key partner for the Paris 2024 Olympic and Paralympic Games and returned as the title partner of the Louis Vuitton 37th America's Cup [10] - The company launched SirDavis Whiskey in partnership with Beyoncé Knowles-Carter, which has already won several prestigious awards [9] Q&A Session Summary Question: Impact of Chinese stimulus on consumer demand - The company noted that Chinese authorities are taking measures to address consumption issues, but the impact of these measures remains uncertain [31][32] Question: Management changes and their implications - The company highlighted the retirement of Chris de Lapuente and expressed confidence in the continuity of its management strategy [32] Question: Strategy changes to address aspirational consumer loss - The company emphasized that the current slowdown is demand-driven rather than offer-driven and will continue to innovate without drastically changing its product range [34][35] Question: Performance of Watches and Jewelry in China - Watches and Jewelry saw a similar trend to Fashion and Leather Goods in China, with no further deterioration in Q3 [37][51] Question: Impact of anti-dumping deposits on Hennessy in China - The company noted that China accounts for less than 20% of Hennessy's business and that the impact of the anti-dumping deposit will depend on various factors, including competition response [42] Question: Trends in onshore vs offshore Chinese spending - Offshore spending by Chinese consumers has increased, with Japan being a key destination, while onshore spending has weakened [48] Question: Outlook for US demand - The company noted slight improvements in the US market, particularly in Cognac and Tiffany, but remained cautious about the overall outlook [69] Question: Retail plans for key Maisons - The company plans to continue renovating Tiffany stores, with 25% already renovated, and expects double-digit growth in these stores [49][78] Question: Impact of Champagne harvest on profitability - The Champagne harvest yield was significantly lower than last year, leading to an expected negative impact of EUR40-50 million on profitability [80] Question: A&P spending and working capital management - The company noted that A&P spending is easier to adjust and that working capital management will be challenging due to excess inventories [83][84] Question: Investment in Moncler - The company described its investment in Moncler as a long-term, limited investment alongside Remo Ruffini, with no plans for further acquisitions [85]
LVMH(LVMUY) - 2024 Q3 - Earnings Call Transcript