LVMH increases dividend after record sales slow down

The largest luxury group in the world, LVMH, will increase its annual dividend despite a slowdown in sales growth after years of record profits and revenues. This marks the end of a historical luxury boom.

Two of Bernard Arnault’s sons were nominated to the board of directors by the French billionaire Bernard Arnault. He is the president and chief executive for the group.

The company confirmed earlier reports that both Alexandre, 31 and Frederic 29, were put forward as board candidates.

Nominations will be put to a vote at the annual meeting of the company in April. Four of the five Arnault kids will have seats on the board if they are successful. Jean, 25, is the only one who won’t.

Arnault said, “We are joining a big family when we join LVMH.” “But I do not intend to leave in the near or medium-term.”

At the annual meeting the company will propose an increase in the dividend per share to €13, from €12 last year.

LVMH has been dubbed a bellwether of the industry due to its size and 75 brands, which range from the fashion houses Louis Vuitton and Dior through to Tiffanys jewellers and Cheval-Blanc hotels.

Analysts view the performance of its leather and fashion goods division as an indicator of global luxury personal goods.

The demand for luxury handbags, ready-to-wear apparel and accessories — the largest division of revenues — grew by 9 percent to €11.3bn during the fourth quarter. However, the growth rate for the entire year was slower than in 2022.

The beauty retailer Sephora was a standout in the industry, delivering record sales and profits. This is despite the fact that inflation has eroded consumers’ spending power.

Jean-Jacques Guiony, LVMH’s chief financial officer, said that the group had “a level of activity” which was “satisfactory at around 10% growth [around Christmas], which might be disappointing to the market because it has grown accustomed to growth rates of 20 or 25% every year.

“That’s not something we could do forever, and it’s not desirable.” We are happy that these numbers are at a high level.

Analysts’ consensus estimates show that the company will grow its sales to €86,2bn by 2023.

This was a slower rate of growth than the 23 percent increase in 2022. Profits grew by 8% to €15,2bn while the operating margin was stable at 26%.

Arnault said that the 2023 performance “illustrates the exceptional appeal of our brands, and their ability to create desire in a year which was tense both on the political and economic spheres.” “While we remain vigilant in the present context, we are confident about the year 2024.”

The company’s proposal to increase its annual dividend was a clear indication of the desire to convey confidence.

LVMH shares fell by a fifth from their historic highs in the last six months, resulting in a market capitalization of €343.6bn. This is in line with a general sector-wide sale as investors questioned the future growth trajectory of the luxury sector after three years’ rapid growth.

The French luxury group’s selective retail division (which includes Sephora and travel retail) grew its sales by a quarter in 2023 to €17.8bn and increased its operating profits by 76%, thanks to a strong performance in North America and Europe.

Guiony stated that the business was able to benefit from the global beauty demand, as well as the return of workers after the pandemic. Shoppers returned to the city centres which had been emptied during the global lockdown.

Eikon’s consensus forecasts for fashion and leather goods for this year were in line with the 9 percent growth. The pace of growth has slowed down compared to the 25 per cent sales increase expected in 2022.