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The luxury group passed the crown of Europe’s most valuable company last month to drugmaker Novo Nordisk A/S. Image Credit: REUTERS

New York: LVMH shares fell after the world’s largest luxury group reported softer sales growth in the third quarter - more evidence the post-pandemic boom in high-end goods is losing steam.

Organic revenue at the French group’s crucial fashion and leather goods unit, which includes the Louis Vuitton and Christian Dior labels, rose 9 per cent, the company said Tuesday, below analysts’ expectations and half the pace of the first six months. Sales at the wines and spirits unit tumbled 14 per cent, much worse than estimates.

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“After three roaring years and outstanding years, growth is converging toward numbers that are more in line with the historical average,” LVMH Chief Financial Officer Jean-Jacques Guiony said during the quarterly presentation.

LVMH Moet Hennessy Louis Vuitton fell as much as 8.5 per cent in early Paris trading. The stock, a favorite of investors in recent years, had already lost some luster as China’s recovery underwhelmed and demand from US consumers cooled. The luxury group passed the crown of Europe’s most valuable company last month to drugmaker Novo Nordisk A/S.

Sales in Asia, excluding Japan, grew 11 per cent - well short of estimates in the third quarter and a sign that China may be losing steam. The only unit that recorded sales ahead of analysts’ expectations was selective retailing, which includes cosmetics chain Sephora.

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Asked about the long-term growth outlook of Dior, the group’s second biggest fashion label, Guiony said it had tripled in size in less than seven years.

“At some point, growth rates have to normalize,” Guiony said. “Don’t expect the brand to continue to grow 30 per cent per annum for ever. It will not happen,” he said, adding that Dior will continue to deliver value.

Guiony said its jewelry brand Bulgari fared a bit better in the third quarter due to its bigger exposure to Asia compared to Tiffany, which has a bigger footprint in the US. Organic revenue growth in the US was only 2 per cent in the period.

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Overall, the group posted 9 per cent organic revenue growth, below estimates. LVMH is considered a bellwether for the luxury sector. Rivals Hermes International and Gucci owner Kering report later this month.