LVMH’s sales dropped in Q1 2024 despite its beauty retail chain Sephora achieving “remarkable growth”.
The French conglomerate reported a revenue decline of 2% from €21bn for the same period in 2023 to €20.7bn.
Overall organic group revenue increased by just 3%, with the “uncertain” geopolitical and economic environment cited as a reason for this modest increase.
“For the first three months of the year the group delivered 3% organic revenue growth on a particularly challenging comparison basis,” said Rodolphe Ozun, LVMH’s Director of Financial Communications.
Sephora was the standout performer for the quarter, gaining market share which helped LVMH’s Selective Retailing business achieve 11% organic revenue growth.
“Sephora had an excellent start to the year,” commented Ozun.
Momentum was particularly strong in North America as the beauty retailer continued to expand its store network, as well as in the Middle East and Europe.
Sephora is set to ramp up its UK retail footprint this year, with three new stores opening in Q3.
The beauty retailer is also exiting Korea after just five years.
“The reason why we close Korea is because there was no winning strategy there. We reviewed that many times,” said Jean-Jacques Guiony, LVMH’s Chief Financial Officer.
“It is a very competitive market and the merchandising advantage was not entirely obvious in Korea, which is not so easy to penetrate with non-Korean brands.
“There was no winning strategy, so we decided to exit, but I would not draw the conclusion quickly that this is significant that Sephora is not working well in Asia.
“There are markets like Singapore where we are doing well and in China we are extremely hopeful that the merchandising effort that we are doing today will pay off at some point.”
LVMH’s duty free retail business for Q1 2024, however, was still trading below pre-Covid levels.
A slow resurgence of international travel to flagship locations in Hong Kong and Macau was attributed to the slump, said the company.
LVMH’s Perfumes & Cosmetics business, meanwhile, achieved 7% organic growth, achieving €2.2bn for the quarter.
This healthy appetite for luxury beauty was driven by fragrance “champions” and a “selective distribution strategy”.
Luxury brand Christian Dior delivered an “excellent” performance thanks to the success of its Sauvage, J’adore and Miss Dior franchises.
The relaunch of the fashion brand’s make-up range, Rouge Dior, and its Capture skin care line were also key drivers.
“The brand enjoyed broad-based growth across all geographies in all its categories,” said Ozun.
Other strong players included Parfums Givenchy, which experienced a “surge” thanks to the expansion of its L’Interdit fragrance.
Maison Francis Kurkdjian also maintained solid growth thanks to its hero fragrance Baccarat Rouge 540.
Skin care and cosmetics from Guerlain contributed to the division’s growth too.
The luxury beauty brand experienced “robust demand” for its Aqua Allegoria fragrances, Abeille Royale creams and Terracotta powder make-up.