Moët Hennessy struggles as Cognac sales slump
Moët Hennessy posted the weakest performance within LVMH, with falling Cognac sales and rising tariff concerns hitting results. Management remains optimistic despite profit pressure and global demand challenges.
Moët Hennessy, the wines and spirits division of LVMH, was again the weakest performer in the world’s biggest luxury goods empire in the first six months of this year.
Compared with the first six months of 2024, the division’s reported sales were 8% lower, while at the organic level they fell by 7%. Profits from recurring operations fell by 33% underlining the extent of the task facing the new management team, which took over at the start of the year.
Cognac hit by US and China demand shift
Hennessy Cognac continued as a major headache, reflecting the continued consumer switch from the category in both the US and China, the largest markets for the spirit.
Sales fell by 15% to €1.2billion, but profit from the recurring operations in Cognac and other spirits was 38% lower.
Champagne shows stability but profits down
Less pessimistically, revenues from Champagnes were virtually static, but profits from recurring operations fell by 33%.
LVMH said there were signs of improving trends for Champagne in the US and Europe between April and the end of June, but that the continued trade tensions in the US and China continued to hit demand for Cognac.
Tariff talks bring cautious optimism
Chief financial officer Cecile Cabanis said she was confident trade talks between the EU and the Trump administration would deliver good news soon.
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Asked how LVMH would view a potential general tariff rate of 15% anticipated for EU exports to the United States, Cabanis said that would be an “overall good outcome for the general mood of our clients”.
Except for wines and spirits, some of LVMH’s labels still have room to draw on their pricing power to mitigate the tariff impact, she said.
Chairman and chief executive Bernard Arnault told the Wall Street Journal yesterday: “I’m pushing as much as I can for us to reach an agreement with the Americans.”
Overall LVMH results reflect wider luxury slowdown
The results for LVMH overall pointed to a continuing depression in demand for luxury goods, with consumers remaining cautious.
Sales for the second quarter to the end of June were down 4% to €19.5 billion, falling short of a consensus forecast for a 3% decline.
Sales at the group’s fashion and leather division, accounting for the bulk of profits, were down 9%, below expectations for a 6% drop.
Arnault said the latest results showed “solidity” in the current context.
“Beyond the prevailing uncertainties… we head into the second half of the year with great vigilance, and I am confident in LVMH’s tremendous long-term potential”, he said.
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