LVMH Sales Fall as China Demand Downturn Continues

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00:00I mean overall we knew he was going to be a tough quarter sales of the biggest

00:04unit the fashion and leather goods units were down nine percent so slightly

00:08worse than expected and that's the unit that includes the top brands you know

00:11Louis Vuitton, Christian Dior and some analysts now there are concerns that

00:15LVMH top brands are no longer delivering what they call best-in-class

00:19and it's true if you compare to Brunel Cuccinelli which in the same period you

00:24know in the first half they deliver 10 percent growth you know they make high

00:27end cashmere sweaters or even Richmond they own Cartier and Van Cleef and they

00:30also grew you know LVMH owns Tiffany and Bulgari and that that division watches and

00:37jewelry was flat so there are concerns there on the better side you have wines

00:41and spirits it was slightly better than expected I mean it was still negative

00:45it's a unit that's been struggling for the past two and a half years and the sea

00:49cognac is a drag it's suffering the US and China but what we're seeing is like a

00:54slight improvement especially of champagne sales in the US overall local

00:58demand is relatively resilient that's what the CFO said however tourism spend is

01:03slightly weaker especially Chinese are no longer spending as much in Japan and

01:07American tourists are curbing spending as well in Europe amid the weaker dollar

01:12yeah and the thing about LVMH is people typically associated with with the

01:18handbags but they're involved in so many different brands across the spectrum from

01:23spirits to beauty is there now gonna be a lot more pressure on LVMH to perhaps

01:28restructure or divest away from some of these companies yes I mean that's the

01:36eternal question and I guess when things are are slowing investors pay more

01:40attention to what we call the conglomerate discount LVMH will offer you a

01:46leather goods that you know handbags which carry typically a higher margins

01:52than Sephora which is a retailer at the end of the day so so right now when things

01:57are slowing ideally what you would see is that one unit is compensating for the

02:02lack of growth of another unit however here what we're seeing is that fashion

02:06leather goods unit and the wines and spirits unit that you know are both

02:10struggling at the same time so there's no indication that anything massive is going

02:16to be happening I mean there were questions whether they would spin off

02:18what in the sea or Sephora right now it's not on the agenda there may be some

02:23cleaning up happening at what in the sea but but investors when they buy into LVMH

02:29they know they're buying into Louis Vuitton but also all the rest of of the

02:34the assets