Luxury Slump: LVMH Faces Tough Year Amid Tariffs and U.S. Recession Fears

LVMH's first-quarter revenue fell short of expectations, affected by reduced U.S. spending on beauty and drinks and weak sales in China. The luxury group's shares decreased significantly as trade tensions and recession fears loom over the sector, with sales in key divisions declining.

The luxury giant LVMH reported disappointing first-quarter revenue as economic challenges mount. American consumers pulled back on beauty products and drinks while sales in China remained stagnant, leading to a 3% decline in sales, a stark contrast to the anticipated 2% growth for the period.

Finance chief Cecile Cabanis highlighted difficulties in the U.S. market, noting slowed sales at Sephora and pressure from Amazon's aggressive pricing. She also pointed out the rapidly shifting trade landscape adding to business complexities, as investors express concerns over tariff threats and obscured demand recovery.

The luxury sector braces itself against recession fears, with LVMH strategizing to enhance U.S. production amidst Trump's tariff pause. Despite facing issues at its Texas facility, it remains the only major European luxury group manufacturing locally, bolstered by its high-margin luxury goods.

(With inputs from agencies.)