LVMH, the world’s biggest luxury group, reported 3Q results today with disappointing sales results for its fashion and leather business. The segment, which includes the Louis Vuitton, Celine and Dior brands, saw sales during the period drop 3.8%
LVMH had warned in prior quarters that its plans to repostion Louis Vuitton as more upmarket would challenge sales, but analysts were still disappointed by the results and the price of the stock moved down.
Results are especially interesting given the recent departure of creative director for Louis Vuitton, Marc Jacobs. Whoever takes his place will be challenged not just by Jacobs’ popularity and reputation as a fashion golden boy, he or she will also be faced with the challenges of repositioning Louis Vuitton in an environment in which competition in the handbag category has become fierce and growth at retail has become harder to come by.
On its fashion and leather business, LVMH said, “Louis Vuitton continues to implement its strategy of very high product quality and distribution excellence. The latest creations in leather goods have been very successful. Fendi continued to focus on fur and leather goods and its third quarter was marked by the opening of stores in Paris and Milan. Céline showed excellent momentum, supported by its leather goods and shoe lines. Other brands continued their development.”