LVMH sales growth slowed last quarter as wealthy shoppers reined in spending on pricey Louis Vuitton handbags and Christian Dior couture.

Organic revenue at the luxury group’s fashion and leather goods unit - its biggest division - rose 1%, about half the gain expected by analysts. That compares with 21% growth a year earlier at the unit, which houses brands such as Celine, Fendi and Loewe.

Shares in LVMH Moët Hennessy Louis Vuitton SE fell as much as 5.2% in early Paris trading, the biggest intraday decline since October. The slump shaved some €17 billion (US$18.4 billion) from its market value.

Sales in the region that includes China tumbled 14% in the quarter, a disappointment for a group that’s been among the most resilient in the face of cooling demand in the country. The domestic slump was partially offset by strong spending by Chinese travelers overseas, especially in Japan, where a weak yen helped lift sales by 57%.

Savvy Chinese shoppers - who often buy luxury goods abroad - are waiting for their next Japan trip to purchase the group’s brands to take advantage of the weak yen, LVMH chief financial officer Jean-Jacques Guiony said during the results presentation. The shift is exerting pressure on the group’s margins, he added.

Run and controlled by Bernard Arnault, the world’s third-richest person, LVMH has some 75 luxury brands spanning fashion, jewelry, hotels and spirits. In a statement Tuesday, he referred to a climate of economic and geopolitical uncertainty.

Profit from recurring operations in the first half fell short of estimates, while the division that includes cosmetics retailer Sephora grew by about half what analysts expected in the most recent quarter.

Champagne demand is facing a severe slowdown with volumes down double digits, Guiony said. LVMH owns labels such as Ruinart and Dom Perignon. Cognac sales in the US, which had been impacted by inflation pressures there, are recovering, he added.

LVMH’s report follows worse-than-expected financial results from Swiss watchmaker Swatch Group AG, which posted a 70% drop in profit it blamed on collapsing demand from China, and a profit warning from luxury group Burberry Group Plc. Cartier parent Richemont posted sales that barely grew in the most recent quarter, even though its jewelry unit proved stronger.

Early Wednesday, Cognac maker Remy Cointreau SA reported a bigger-than-expected slump in sales, blaming slack US demand and worsening markets in Southeast Asia.

Purveyors of luxury goods enjoyed a pandemic-era spending boom which ran out of steam last year, especially for brands catering to so-called aspirational customers. The most exclusive brands such as Hermes International SCA - which reports first-half results later this week - have better withstood the downturn.

  - Bloomberg