By Nina Kienle

LVMH shares dropped sharply and dragged luxury stocks lower after the Louis Vuitton owner reported first-quarter sales that fell short of analysts' expectations.

The update sent shares in the French luxury behemoth down as much as 8.3% shortly after trading in Europe started, wiping out more than $25 billion in market value at one point. This meant LVMH briefly lost the top spot as the world's most valuable luxury group to Birkin bag maker Hermes International, before recovering it as the stock's losses eased.

Considered a bellwether for the industry, LVMH posted a decline in first-quarter sales, hit by weaker demand from Chinese buyers in Japan compared with last year and U.S. slowdowns in its Sephora beauty retailer and wine and spirits division.

Luxury stocks fell across the board. Hong Kong-listed Prada closed 4.2% lower. In European morning trade, Britain's Burberry shed 2.2%, Salvatore Ferragamo dropped 1.6% and Gucci owner Kering was down 1.2%. Cartier parent Richemont, Brunello Cucinelli and Hermes traded down as well.

The luxury bellwether didn't offer much to cheer for, Citi analysts Thomas Chauvet and Mahesh Mohankumar said in a note to clients. Expectations for LVMH had already been tempered over the past month due to tariffs and recession risks, they added.

"As the first luxury company to report [first-quarter results], LVMH's 4% revenue miss will likely set a negative tone for the upcoming reporting season, with the analyst call having provided few details about U.S. tariffs risks mitigation," the Citi analysts said.

The conglomerate steered by Bernard Arnault on Monday posted revenue of 20.31 billion euros, missing analysts' forecast of 21.21 billion euros.

None of its divisions reported organic growth in the first quarter.

"These results indicate a more difficult trading environment for the broader luxury sector in our view," RBC Capital Markets analysts Piral Dadhania and Richard Chamberlain said.

Write to Nina Kienle at nina.kienle@wsj.com

(END) Dow Jones Newswires

April 15, 2025 04:58 ET (08:58 GMT)

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