Moët and Louis Vuitton owner LVMH on Thursday posted a 17% drop in comparable sales in the first quarter due to the coronavirus pandemic, as government-imposed lockdowns forced it to close stores and production sites in key markets.
LVMH, like rivals such as Gucci-owner Kering, has had to temporarily shut shops in much of the world after the coronavirus first emerged in China late last year and later spread to Europe and the United States.
The world's biggest luxury goods group also halted production at major sites including in France, where it makes the bulk of its pricey Vuitton handbags for instance, though it has used some factories to produce face masks and hand gels.
LVMH had warned in late March that first-quarter sales would fall by between 10% and 20% compared with a year ago. It said on Thursday revenue stood at €10.6 billion ($11.5 billion) in the January to March period, down 15% on a reported basis.
That marked a 17% fall on a like-for-like basis, which strips out foreign exchange swings and acquisitions.
In its key fashion and leather goods division, home to other brands like Christian Dior, first-quarter sales proved slightly better than some analysts had expected, falling 10% on a like-for-like basis compared with a year earlier.
The group said online sales had surged and it hoped a broad recovery would start in May or June.
"Thanks to everyone’s commitment and the strength of its brands, the LVMH group maintains good resilience in the face of this worldwide challenge," Bernard Arnault, chairman and CEO said.
LVMH said Arnault, France's richest man, would forego his full pay in April and May and give up his variable remuneration for the whole of 2020. Other top executives including daughter Delphine Arnault, who works at Vuitton, will do the same.
The group also said it would trim its proposed dividend by 30% to €4.80 per share and tighten its control of costs.
While business in China has started to pick up, other countries like Italy and France are set to be under lockdown until early May at least and major world economies face a deep recession. Chinese consumers account for over a third of all luxury goods purchases, although many shop on overseas trips.
That has led analysts to forecast an even greater sales decline for luxury groups in the second quarter. Consultancy Bain sees sales falling by between 15% and 35% this year.
LVMH is generally expected to weather the crisis better than others thanks to its diversified model and the strong performance of its Louis Vuitton and Dior brands.
The group said its the second quarter would still be very much affected by the coronavirus crisis, particularly in Europe and the United States, but it could not precisely evaluate the impact without knowing when business would return to normal.
Chief Financial Officer Jean Jacques Guiony said he did not expect the pandemic to have a lasting impact, adding LVMH was keeping a lid on costs including by negotiating rent reductions.
He said it would stick to a contract signed last year to buy U.S. jeweller Tiffany for $16 billion after denying speculation last month that it could buy Tiffany shares on the open market for a lower price. The deal is expected to close later this year.