Shares in luxury companies took a sharp drop in Europe on Wednesday as investors reacted to the third-quarter results from brand behemoth LVMH, which owns major fashion houses including Louis Vuitton, Christian Dior and Marc Jacobs.
The results heightened concerns that Chinese consumers are shying away from buying big-ticket luxury items. The company did not include a regional breakdown of sales.
The global luxury group reported 10% growth in sales in the first nine months of the year – which was roughly in line with analyst expectations – but it noted it would “continue to be vigilant” amid “an uncertain geopolitical and monetary context”.
China is a key market for LVMH and other luxury retailers. About one-third of all LVMH revenue comes from Asia.
There are worries that the expanding trade war between Beijing and Washington is hurting consumer sentiment in China. In particular, luxury automaker Jaguar Land Rover reported that sales to China in September were down by 46%, noting that “import duty changes and continued trade tensions held back consumer demand.”
“Despite strong sales in LVMH’s fashion and leather goods sector and a healthy performance overall, shares in the luxury conglomerate and across the luxury fashion industry today have dropped, as the possibility of a Chinese-American trade war continues to simmer in the background,” Euromonitor’s fashion analyst, Florence Allday, told Yahoo Finance UK.