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Louis Vuitton Loses €23 Billion on Weak China Demand
As a result, the brand's market value fell by 23.28 billion euros to 289.14 billion euros. Over the year, the company lost 21% of its capital.
As Bloomberg notes, luxury brand owners are losing ground due to declining demand from Chinese consumers. LVMH's organic sales in Asia, including China, fell 16% in the quarter. "Most markets, including mainland China, are currently facing economic challenges," said LVMH CFO Guiony.
Beijing's stimulus measures have yet to produce a significant boost in consumption, and luxury goods are on the decline ahead of Christmas and the Lunar New Year. In 2020, analysts all predicted that China would become the world's largest luxury market within five years.
Analysts had expected a new surge in consumption, including in the luxury goods sector, after the economic downturn caused by the coronavirus pandemic. But Guangzhou-based financier Louisa Chen said she hasn’t bought anything over $702 since last year. Even with her income up, she’s not ready to go back to spending big at the store. Consumer behavior has changed in recent years.
LVMH is a French company specializing in the production and sale of premium products. These include brands such as Louis Vuitton, Moet and Hennessy, Christian Dior, Fendi, Givenchy, Kenzo, Marc Jacobs and Bulgari.
This year, LVMH owner Bernard Arnault topped Forbes' list of the world's richest people. In April last year, his fortune was estimated at $233 billion.