Moët Hennessy sales and profits fall sharply as LVMH faces global luxury slowdown

Moët Hennessy, the wines and spirits arm of LVMH, reported a sharp decline in sales and profits for the first half of the year, making it the weakest performer within the world’s largest luxury goods group. The division’s reported sales dropped 8% compared to the same period last year, with organic sales down 7%. Profits from recurring operations fell by 33%, highlighting the challenges facing the new management team that took over at the beginning of the year.

The main source of difficulty was Hennessy Cognac, which saw a significant drop in demand in its two largest markets, the United States and China. Consumers in both countries have shifted away from Cognac, leading to a 15% fall in sales to €1.2 billion. Profits from recurring operations in Cognac and other spirits were down by 38%. The company cited ongoing trade tensions and changing consumer preferences as key factors behind the slump.

Champagne sales provided some stability for Moët Hennessy, with revenues holding steady over the period. However, profits from recurring operations in Champagne also fell by 33%. LVMH noted some signs of improvement for Champagne in the US and Europe between April and June, but said that continued trade disputes with the US and China were still weighing on Cognac demand.

Cecile Cabanis, chief financial officer of LVMH, expressed cautious optimism about ongoing trade negotiations between the European Union and the US administration. She said she expected positive news soon and suggested that a general tariff rate of 15% on EU exports to the US would be manageable for most of LVMH’s brands. Cabanis added that outside of wines and spirits, many LVMH labels could use their pricing power to offset any tariff impact.

Bernard Arnault, chairman and chief executive of LVMH, told reporters he was actively pushing for an agreement with US officials to resolve trade issues. He emphasized his confidence in LVMH’s long-term prospects despite current market pressures.

The results for LVMH as a whole reflected a broader slowdown in luxury spending worldwide. Sales for the second quarter fell 4% to €19.5 billion, missing analyst expectations for a smaller decline. The group’s fashion and leather goods division, which generates most of its profits, saw sales drop by 9%, worse than forecasted.

Arnault described the company’s performance as showing “solidity” given current uncertainties. He said LVMH would remain vigilant heading into the second half of the year but maintained confidence in the group’s long-term potential. The company continues to monitor global economic conditions and trade developments closely as it navigates a challenging environment for luxury goods.