• by Sarah Mahoney  @mahoney_sarah, July 25, 2024

Miley Cyrus appears in Gucci fragrance ad

 Downbeat financial results from LVMH, Kering and Burberry are keeping many observers in the luxury world up at night.

In recent weeks, the balance sheets for luxury brands are so bad that the Business of Fashion, which covers the industry, is calling it a crisis. “After a decade of explosive growth, sales have stalled, with demand particularly weak in the key China market,” the trade publication reports. “Even the strongest brands are struggling to shake off macro-economic gloom and shifting consumer affinities, while weaker players, from Gucci to Burberry, scramble for new strategies.”

While this isn’t a new slump, it is intensifying. Last month, Bain & Company’s ongoing luxury research described the category as “stalled,” with top brands scrambling to both cater to their top clientele, while also reaching out to new audiences.

And while 2023 results got a jolt of energy from a resurgence of luxury travel and a very merry holiday season, the first quarter of this year saw a marked slowdown.

The picture got more concerning this week, with Kering, parent of Gucci and Yves St. Laurent, reporting an 11% decline in sales for the first half of the year and LVMH posting a 1% decline.

Earlier this month, Burberry showed chief executive officer Jonathan Akeroyd the door, replacing him with Joshua Schulman. That shakeup came just after the British luxury company notched a 20% decline in sales.

LVMH put a happy face on the report, with chairman and chief executive officer Bernard Arnault calling the financial results proof of the luxury giant’s “remarkable resilience.”

In the company’s announcement, he says that given the current economic and geopolitical uncertainty, LVMH is as “driven as ever by our dual focus on desirability and responsibility,”

LVMH called out robust results in Japan, where sales rose in double-digits, rapid fragrances and makeup growth, and “exceptional performance” at Sephora.

However, sales of fashion and leather goods were flat, and wine and spirits sales sank 9%, while revenue in watches and jewelry fell 3%.

At Kering, where revenue dropped 11% in the half and net income tumbled 42%, store traffic declined markedly. And even wholesale efforts struggled, falling 6% for the period.

At Gucci, sales fell 20% in the half and 19% in the second quarter. And at Yves Saint Laurent, sales dipped 9%.

“In a challenging market environment, which adds pressure on our top line and profitability, we are working assiduously to create the conditions for a return to growth,” said François-Henri Pinault, chairman and chief executive officer, in the announcement. “Our Houses pursue their investments to enrich their offer, intensify the impact of their communications, and reinforce the exclusivity of their distribution. We make certain that every one of these investments creates value for the long term. While the current context might impact the pace of our execution, our determination and confidence are stronger than ever.”