LVMH Moët Hennessy - Louis Vuitton, Société Européenne (MC) Earnings Call Transcript & Summary

Ladies and gentlemen, good afternoon, and welcome to today's conference call. I'm Rodolphe Ozun, Director of Financial Communications. And with me is Cecile Cabanis, our Chief Financial Officer. Cecile will start by taking you through the key highlights of the first 9 months of 2026. I will then comment on performance by business group. After that, Cecile will conclude and then we'll be happy to take your questions. Before I begin, I refer you to the safe harbor statement included in our press release and on Slide 2 of our presentation, which is available on the LVMH website, lvmh.com. Let's now move on to today's topic, our 9 months figures, and passing over to Cecile.

Thank you, Rodolphe. Good afternoon, and thank you all for joining today. I will start with Slide 3 with a few comments on the third quarter. As you've seen in the press release, LVMH showed good resilience over the first 9 months of the year and recorded again positive organic growth in the third quarter. Currency impact on revenue turned positive in Q3 after five consecutive negative quarters. The quarter was marked by a more macro challenging consumer backdrop among Chinese clientele, which resulted in a mid-single-digit decline in Asia for the quarter. With a more tangible impact on Fashion & Leather Goods division, most exposed to the region. As far as the other divisions are concerned, the strongest performance came from Wine & Spirits, Watches & Jewelry and selective distribution, all up mid- to high single digits, while Perfume & Cosmetics grew in line with the group average. At group level, Europe, the U.S. and Japan all grew mid-single digit in the third quarter, more than offsetting the decline in Asia. Moving to Slide 4, where you see the revenue bridge for the first 9 months of 2026. Group revenue reached EUR 57.1 billion, up 2% organic, down 2% on a reported basis. The reported figure includes a negative 3% currency impact and a negative 1% perimeter impact from the disposal of additional GFS assets and the sale of Marc Jacobs closed on September 1. As shown on Chart 5, the geographic revenue mix remained entirely stable versus the same period last year. So again, a very balanced geographical footprint with U.S. representing 25%; Asia, 27%; and Europe, 26%. Moving to Slide 6. You can see that all regions are positive year-to-date, but with fast evolving quarterly patterns. In the third quarter, specifically, Asia was penalized by a sharp macrolide deterioration in Chinese consumer sentiment with tangible impact on discretionary expenses, which explain the mid-single-digit decline that you see. Europe, on the other hand, accelerated markedly driven by improving trends across all divisions. Finally, the U.S. and Japan, up 5% and 6%, respectively, were slightly above year-to-date average with fairly consistent trends in the U.S. more uneven in Japan, but mostly due to very uneven comparison basis. Rodolphe will now take you through a division performance in more detail.

Thank you, Cecile. And as usual, we'll start with Wines & Spirits. Slide 9 shows the Wine & Spirits business group delivered EUR 4 billion in revenue for the first 9 months of 2026. This represents a 5% increase on an organic basis and a 3% increase on a reported basis after taking into account a negative 2% currency effect. Broken down, Champagne & Wines generated EUR 2.2 billion in revenue over the 9 months period, up 6% organic and up 3% reported. And Cognac & Spirits recorded EUR 1.8 billion in revenue, up 4% organic and up 2% reported over the 9 months period. On Slide 10, which details some of the key highlights of the business group. The positive trends seen over the course of the first half continued and even accelerated modestly, resulting in 6% organic growth in Q3 for Wines $ Spirits as a whole. In the third quarter, our key champagne brands all contributed to growth, driven by solid demand in Europe, Japan and travel retail and by the continued outperformance of [indiscernible], which resulted in a positive mix impact. Year-to-date, our Champagne business also benefits from low single-digit volume growth and low single-digit price impact. Other wines enjoyed a strong summer season in Europe, supporting tangible volume growth in the third quarter, and Chandon enjoyed strong U.S. demand and a good response to its new [indiscernible] & Sprits collection. In Cognac, Hennessy's performance continued to improve in Q3, driven by China, Travel Retail and Europe as well as good momentum in the VSOP quality. And in the U.S., we're pleased by the launch of the new Hennessy, ready to serve. Still early days, of course, but it appeals to both existing and new customers and creates a positive halo effect on the brand. Lastly, in Spirits, Belvedere and Glenmorangie continued to grow in the third quarter. Now turning to Fashion & Leather Goods on Slide 12. Revenue reached EUR 26.4 billion for the first 9 months of the year. This represents a 2% decrease on an organic basis and a 4% decrease on a reported basis after taking into account a negative 2% currency impact. I'm now on Slide 13. As processes introduction, the quarter was marked by a more challenging consumer backdrop in Asia, whilst U.S. demand continued to grow, and Europe and Japan improved compared to the first half of the year. On Louis Vuitton, specifically, the brand continued to capitalize on the strength of the monogram through iconic products such as the speedy and it's high-end incarnation, the P9, which continues to enjoy increasingly strong demand with waiting lists across markets as well as more recent product launches such as the Square and the Multipath. Also worth highlighting is the strong performance of ready-to-wear year-to-date and the rising success of animations such as the back-to-school collection. Finally, the quarter saw the opening of a new store in [indiscernible] in China, which is after a good start and recent flagship reopenings are also delivering strong results. Christian Dior delivered positive organic growth in the first 9 months of the year, driven by the success of Jonathan Anderson's collection, especially women bags and red-to-wear. The Maison's icon, the [ The Lady Dior ] is performing well, while the [indiscernible] bag continues to gain excellent traction and a new house of [indiscernible] renovated by Peter Marino also opened in Milan mid-September. Finally, Loro Piana and Rimowa continue to enjoy above average momentum and elsewhere, the creative renewal of our brands is yielding encouraging results exemplified by the success of the soft on [indiscernible], the new Baguette at Fendi, women ready-to-wear collections at Givenchy or the new Amazon 180 at Loewe to give a few examples. Moving to Perfumes & Cosmetics on Slide 15. Revenue reached EUR 5.9 billion for the first 9 months. This is flat on an organic basis and down 2% on a reported basis after taking into account a negative 2% currency impact. Turning to Slide 16, which lists some of the proximation by our Maison. To summarize the quarter, I would say, once again, our historic Maison notably Parums Christian Dior and Guerlain continued to outperform. Fragrances remained strong, and the main driver of growth year-to-date, also including a good performance from [ Benefit ] and Maison Maison Francis Kurkdjian. By region, Asia and Japan enjoyed good momentum, and the Middle East remained resilient and the division also saw the appointment of a Chief Operating Officer to help drive stronger convergence between Maisons across manufacturing, supply chain and purchasing functions. Now on Watches & Jewelry. I'm on Slide 18. Revenue rose to EUR 7.7 billion in the first 9 months, up 8% on an organic basis and up 4% on a reported basis after taking into account a negative 4% currency impact. Turning to Slide 19. Jewelry recorded an excellent performance year-to-date, supported by growth across geographies and our Maisons made good progress on strategic priorities. Tiffany's iconic lines, for instance, HardWear and Knot continued to outperform materially alongside Sixteen Stone and Bird on a Rock, which are resonating with a broad clientele. Tiffany also progressed in store renovation plan with now 40% of stores renovated, also outperforming significantly. In high jewelry, the Hidden Garden collection, has been well received and contributed to the continued growth of the high jewelry segment. Bvlgari enjoyed another quarter of strong momentum, thanks to the growing success of iconic line Serpenti, Diva and [ B01 ] and good success in watches, notably Serpenti and Octo, which are adding further to its momentum. The Maison also [indiscernible] art installation on the New York high line as a part of New York Fashion Week. It's Bvlgari's first installation in the United States, which has consistently been a fast-growing market for the Maison over the past few years. Additionally, our watch Maison continued to showcase their expertise with several unique new launches and Hublot notably welcome artist, Jeff Koons, as collaborator and global brand ambassador. Now to discuss our last business group, Selective Retailing, on Slide 21. And Revenue in the first 9 months came to EUR 12.5 billion, a 6% increase on an organic basis and a 1% decline on a reported basis after taking into account a minus currency impact and a minus 4% perimeter impact due to DFS disposals. And moving to Slide 22. Sephora continues to excite worldwide with growth across all regions. Notably, it's two largest markets, the U.S. and Europe where Sephora continues to expand into new geographies and new countries. It's a unique selling proposition of a fun shopping experience, exclusive brands, exciting stores, continues to resonate. For example, with the brand Road, which just launched with Sephora in Europe and Sephora, more recently, announced the launch of TikTok in the U.S., and Marks & Spencer, a partnership in the U.K. to help expand its reach with customers and complement existing footprint. Le Bon Marche enjoyed another quarter of growth, supported by a rich array of artistic and cultural events, the latest bringing the best of Japan to Paris. And meanwhile, the group continued with the sale of DFS assets, including the latest announcement in August of the sale of DFS Abu Dhabi Travel Retail to Fadi Group, which -- all of which resulted in a 7% perimeter impact on the division in Q3.

Thank you, Rodolphe. So as a conclusion, maybe a few words. As presented the third quarter brought a more challenging Chinese consumer backdrop with a feel good factor deteriorating at the very beginning of the quarter, and this added to a Middle East situation that is still a headwind. We hope these situations will subside. But in the meantime, self-help is a priority for performance to improve. And on that front, we are seeing progress across our brands. Louis Vuitton keep scaling traction on recently launched product across its price pyramid. We can go back on that later. [indiscernible] now outperforming across geographies, double digit with the American clientele year-to-date. Selling is improving fast and building real momentum in the U.S. Obviously, we will continue and accelerate self-help initiatives in the coming months, while building on the strong momentum of Loro Piana and [indiscernible]. At the same time, it is worth noting that Watches & Jewelry and Sephora kept delivering very solid growth. Wine & Spirit posted mid-single-digit growth for a third straight quarter, proof that the team's efforts are paying off. While the environment got tougher, the group continues to grow in the third quarter, supported by [indiscernible] balance and diverse portfolio. And finally, share buyback continued and amounts to EUR 2.3 billion for the first 9 months of 2020. Thank you for your attention. We are now ready for your questions.

[Operator Instructions] The first question is from Chiara Battistini, JPMorgan.

The first question on the performance in Fashion & Leather Goods. I was wondering if you could give some more color by brand, possibly especially the two bigger ones. And as you mentioned, that we would go back to the product pipeline and the pyramid of LV, if you could give us any update on the strategic actions you're taking on the product and innovation for LV specifically? The second question on Watches & Jewelry and the slowdown that you also recorded there in Q3. I was wondering if also there you could give us a bit more color in terms of the drivers of that slowdown possibly by region? And any brand in particular that you would call out driving that slowdown? And the third question, if I may, on the margin implications as we are tracking on a negative number in Q3. If topline remains negative in Q4. So for H2, how should we be thinking about the margin implications? I know it's early in a sales call, but I'll try my luck.

Thank you, Chiara. On the first question regarding the performance by brands in Fashion & Leather Goods. The first thing to consider is that the slowdown came from subdued Chinese demand. So this is broad-based. Obviously, as always, you have outperformance in the Q3 is the case of Dior. It's the case of Loro Piana and [indiscernible], for example, Louis Vuitton is not very far from the average as usual. It's a bit below this quarter. Vuitton was also impacted by a one-off logistic and transportation disruption from what one of our freight for water, which costed a bit more than a point of growth for the quarter. It was unfortunate, it's behind us, but it didn't help for the performance on the quarter. So that would be for your questions regarding the different brands. Regarding pipeline and innovation for LV. So I obviously won't unveil all the products that are today in the pipe. What we can already say is that self helps are delivering, and we continue to work, making sure that we strike the right balance between elevation and recruitment. So what we see in the mix of initiatives that started and that will continue is robust growth on the evergreen products like the [ Alma and SPD, ] for example, good response on recently launch bags, such as the multipass and Esquire. Good response as well on new designs and materials such as the monogram emblem or the [indiscernible], which is this new material, getting quite a good success. Women ready-to-wear has been positive year-to-date. And back to school animation, as Rodolphe mentioned, was quite positively received. So overall, we are seeing that the initiatives are bearing fruit. On the high-end part, on the elevation part, we still have P9 that is doing very well. As you know, it's on waiting list. Rodolphe mentioned that as well. We have jewelry doing well. And on the other side of the spectrum, Peru continue to do well. So indeed, to counter the macro short-term pressure, it's absolutely necessary that bottoming execution and self-help are there. And so what we have started to do is delivering, we need more and more will come. On Watches & Jewelry slowdown, so the first explanation is the same as for everyone. By the way, it's for the industry and even beyond. It's the slowdown [ microLED ] from Chinese demand and the fact that the consumers were less inclined to spend on discretionary goods. So this is one of the explanation. We had also -- even if it's still growing very nicely, some slowdown in the U.S. between Q2 and Q3. There was a bit of a tougher basis of comparison for Tiffany, for example. But overall, on Watches & Jewelry, we still have a very good growth. We still have icons that are continuing to be overperforming, especially at Tiffany. You remember that Q3, we had a very nice dynamic around the icon like hardware not but also joining them for this quarter, the Sixteen Stone and Bird on a Rock, which are performing well. We are still having some legacy business that is weighing on the performance. But overall, it's doing well, and we are very confident. And then on Bvlgari, has really a broad-based performance. So we are very happy with that. Bvlgari is really basing his own strategy on his high-end positioning, but able to launch a new line that are more accessible and enables also recruitment and volume. So it's been a great journey for Bvlgari. On margin implication, which is your third question. So the first technical item, which is something we mentioned in H1 is that FX will remain a headwind around 70 bps similar to H1. So this will not change much. Cost discipline and efficiency, of course, remains a clear priority. But for the short term, cutting costs will not bring additional sales. So we can probably fully offset the short-term top line pressure, but we are keeping and pushing on every level we can for improvement.

The next question is from Charles-Louis Scotti, Kepler Cheuvreux.

I have three. The first one, would you be able to comment on the exit rate for Fashion & Leather Goods as you mentioned that there has been a deterioration of the Chinese consumer backdrop at the very beginning of the quarter. Has it been the case also at the end of the quarter and during the Middleton festival and the Golden Week. And do you think the October 22 deadline for the payment of taxes on offshore trust in China and potentially the U.S. mid-term elections could have an impact on the demand also in Q4. My second question is on this one-off logistic issue attribute just to make clear, you mentioned that it has had an impact of 1 percentage point, where you referring to the Louis Vuitton getting sales growth or the overall Fashion & Leather Goods division? And finally, on jewelry, I would be interested in understanding the contribution from pricing, which I suspect is close to around 10%. Are you planning to implement further price increase in October? And if not, should we expect growth to slow down further as you start lapping the significant price increases implemented in October last year.

Thank you, Charles. So maybe a response to your technical question. I was mentioning the impact of the logistics disruption that we had in for Louis Vuitton. So it's more -- a bit more than 1 point on Louis Vuitton organic growth. So that's for your clarification question. On the exit rate and is it improving? Overall, what we've seen is the exit rate did improve across the quarter. The brand initiatives are also paying off, but we need to continue to accelerate. We can hope for the context to subside, but the best way to answer it is really about bottom-up execution and self-help initiatives that needs to continue to come. So that's for what we've seen in the quarter. Your question on tax impact, I don't really like to comment [ macro, ] your view is as good as mine. What we can say is that the news flow has not been particularly good in China in the summer. So this has really weighted on the feel-good factor and created a short-term short-term subdued Chinese backdrop. Again, we hope it will subside. We're not sure when, and we make sure that we work on what we control which are really self-help initiatives that are gradual, but that are already paying off. As we've seen, for example, Dior is outperforming in many markets with the newness working very well, but also the work on the mix that has been done in the bag's portfolio. So there are many good things. We need more while the context is a bit under pressure. On the pricing on Watches & Jewelry, there was some price impact, which is not new. It was also subsequent to the increase of gold prices. What we can say now is that probably price increasing should moderate because the prices of coal is stabilizing. So we shouldn't see as much as price impact in the future as we've seen in the recent year to overcome to coal prices. And in Q4, you need to have in mind that the basis of comparison will be a bit tougher for Bvlgari, which was performing very well in Q4 last year.

The next question is from Antoine Belge of BNP Paribas.

Yes Antoine Belge from BNP. So three questions, if I may. You already gave a bit of flavor on the slowdown on Fashion & Leather, but other the 6 points of deceleration if all is attributed to the Chinese cluster, and I think the change was flat the previous quarter. So would it be down around 20%? Or are there maybe some kind of a slowdown maybe in U.S. and elsewhere? On my second question -- my second question about, China. You mentioned the macro and the news flow. You didn't allude to the Multi controversy especially if the exit rate is a bit better, maybe it's that this -- the impact of that is obviously disappearing. So would you agree on that? And also, you're talking about quite a lot of self-help. I thought Q3 last year was quite full of self-help, notably with the board in Shanghai. Did that created a bit of a tough base also for you. So yes, if you could maybe a bit more about what you're doing in terms of clienteling. And finally on Dior, so Dior you said is outperforming. Is it in positive territory. So at least 5 points higher than the division and where, I mean, do you consider that you're on track? Or isn't it a bit disappointing not to see stronger growth now that there are more products from the new designer in store.

Thank you, Antoine. So maybe the way -- the best way to answer your first question is to give you a bit of details around clienteles. So as you hinted, the macro news flow that led to a rapid shift in consumer Chinese backdrop translated in Chinese demand down mid-teens. American clientele by contrast held up well, up mid-single digit. Europeans were up modestly Japanese and Middle Eastern were down mid-single digits. And if your figures don't fully reconcile, it's because the minus 5% is a small, minus 5. It's much closer to minus 4.5. So that would be for the year-on-year. If we look at the dynamic, the deceleration is obviously largely driven by the Chinese clientele Americans, while still growing also contributed a bit to the slowdown. It's also where the one-off in terms of logistics fall Vuitton impacted the most. But otherwise, the clientele is up in a very healthy way and growing nicely. And all the other clienteles overall between Q2 and remained unchanged, so no big move there. On your question on [indiscernible], very difficult to size a precise impact. But the net-net, it's probably fair to say that it had a negative impact, at least at the beginning of the quarter. On -- you mentioned regarding Q3 last year, the self-help and the [indiscernible]. And is it now putting a heavier comparison basis I think it's very interesting to come back on [indiscernible] because it's one store. So you make the count and you look at how big it can be in terms of comparison basis. But what is very interesting is that one year later, it's still full. So the bookings are always we kept the bookings. It's always full. You have a huge traffic there. And for the brand, it continues to create a halo in terms of image that is much beyond the traffic, but it shows that when traffic is subdued, if you are able to create real experience, you can get the customers to come to you. So this is good because after one year, it's still going very well. Dior positive, yes, is positive year-to-date. It's, as I said, double-digit year-to-date with the American clientele, which is very good. On the quarter, it's flat, but it's also linked to the Chinese backdrop, which, as I said, it's creating impact across brands, but Dior is outperforming in this situation and with the Chinese as well. I -- we are not at all disappointing to say the truth. If we look qualitatively at what is happening, newness is getting good results in all categories. We are seeing great traction on women ready-to-wear, which is the clearest read on consumer appetite for Jonathan Anderson designs. Bags are of different nature. They are more permanent products. So it takes a bit more time, but we are seeing successes across diverse design and price point, either some tweaking into already existing iconic clients or some new lines or some adding mixes that are working very well, like the Dior [indiscernible] or like [indiscernible] on the higher end. And this is ultimately how you build icons along the road rather than simply doing more of the same, which might create a short-term higher impact but might not create enjoying momentum. And we believe that Jonathan has a very clear vision on [ Dior ] and where he wants to take the brand and is being building very nicely and consistently quarter-after-quarter, season after season as far as is concerned, adding new pages with great results. So no, we are not disappointing.

The next question is from Erwan Rambourg Goldman Sachs.

I hope you can hear me, Erwan Rambourg, Goldman Sachs. So maybe a follow-up on Vuitton. Is it the case that following Milly, maybe you stopped investing a bit in that market? And would it be the case that you are now in a position to maybe restart that? And then maybe naive question on the one-off on logistics. Whatever you missed out on shipping in Q3. Do you make up for part of that in Q4? Secondly, looking at the creative renewal, is there a way to think about the the Jonathan Anderson product that Dior potentially ramp-up in terms of, I don't know how you express it, percentage of his products within the brand or potential for this to go higher. And then maybe if you can mention between Celine, Fendi, Givenchy or others what you're seeing in terms of creative renewal and what the time line might be? And then maybe lastly on Sephora -- if you could talk about maybe comparing, contrasting like-for-like versus space expansion for the U.S. on one side and Europe on the other.

Thank you, Erwan. You're talking very fast. So on the first question regarding Vuitton and Milly, we are not stopping investing because there was the multi topic. And I think -- let's maybe park Milly and really focus on the current macro pressure because the truth and it's broad based is that there was a shift in Chinese consumer backdrop, and this forces us to sharpen our self-help effort. And on that point, we are fully aligned, and we're working. That's why also I listed some of the initiatives to say that it's what we need to do, and we need to be very careful not to be too tactical when we do that. But what we do is working. We need to do more, but we have not stopped investing in China. On logistics, on the one-off, well, it's always very difficult to say whether we're going to catch up the sales or not. We hope we will, then we'll see when we'll see in the next weeks. But that was definitely an additional factor in Q3 that is now behind us, that didn't help Vuitton in the performance. On [ Guerlain, ] again, we've been happy with the performance. What we are seeing is a lot of appetite on the ready-to-wear for women. Men is less advanced, so we need to do a bit more work. On bags, there is really a good dynamic on tweaking the icons, but also starting preparing to have more icon in the future. So it takes a bit of time, but it yield short-term benefits. I was mentioning the Hublot. So we are very confident with again, and as we discussed in H1, we are aiming to build enduring a long-lasting momentum and not being too tactical. So it's season after season that you can build, and that is gradually increasing in your mix with all the new design and initiatives. Sephora like-for-like versus reported. So first, let me take this opportunity to to say a few words on Sephora, which had, as Rodolphe said a very good performance again this quarter, and it's really broad-based on markets. It's broad based on category. And it's really about continuing to gain leadership in key markets. Like-for-like is today overall, half of the reported figures, if you want to take it. So it's still very strong and nice.

The next question is from Thomas Chauvet, Citi.

My first question on Asia, Japan and the minus 5. Could you give us a rough indication of Greater China versus the other Asian markets in the past, you gave a lot of color on these other Asian markets, which sometimes perform quite well. And how is in that Chinese cluster you gave earlier, the onshore versus offshore performance. Secondly, on the other fashion houses beyond Vuitton and Dior, it looks the creative change has benefited Dior more than Celine, Loewe or Fendi? Is that a function of the greater investments and efforts you've put very early on at Dior. And are you now ready to support these other three smaller houses in a similar way to return to growth in '27? And just coming back thirdly on the F&L margins, you protected margin in H2 last year and H1 '26 at constant FX, despite a single-digit revenue decline, thanks to the cost reduction efforts you've mentioned. Is that effort still continuing in H2, or is it more difficult to protect margin at constant effects, I understand the message you gave on FX. But with that kind of revenue decline because you've come to the end of that, perhaps that cost reduction cycle?

Thank you. So on the clientele, you have the Chinese demand, which has been negative mid-teens. Japanese have been down mid-single digit negative. And the rest of the greater Chinese part has not changed a lot versus the previous quarter. On offshore versus onshore, for the Chinese cluster, offshore was negative mid-single digit onshore declined double digits, so a bit more than the cluster average. In both cases, the quarter-on-quarter swing perfectly mirrors the comp space. And sequentially, it's been a bit better at the end of the quarter, as I mentioned. LV, Dior, Celine, Loewe, Fendi, no, it's not that we are not happy that I didn't get the question, but thank you for asking. As I mentioned earlier, Celine is getting a very nice traction on recently launched soft bags. It's also double-digit in shoes, creating great momentum in the U.S. So it's progressing very well, and we are very confident that Celine is now getting the right level of traction to become a growth driver for us. Fendi, and, as you know, Maria Gracia has been the latest to change. So you need again to wait a bit of a season, so that it takes gradually part in the mix. But as mentioned, Rodolphe, the [ bag at ] Fendi that was tweaked with a softer material is doing well, and we are quite confident. And on Loewe, we're starting to see areas and pockets of momentum, especially on some of the recently launched bag. So it's a journey. But overall, we are quite encouraged by the results on the different brands. It's a question of maturity. It's a question of growing in the mix for the newness but we are encouraged. On the margin, yes, we are working on cost. Obviously, as you know, now cost cut short-term cost cutting as its limits. It doesn't bring sales, but it also has its limits and efficiency and pursuing sustainable efficiency, and we have the opportunity to discuss takes a bit more time. So I'm not sure we can't fully offset the short-term top line pressure, but we keep pushing, and we will keep pushing until the last day for improvement.