Today 4

Loewe 2024 profit down 24% as Asia slows; US and Japan drive growth

Bottom Line Impact

Absent swift cost and mix actions, Loewe's margin compression will dilute LVMH's fashion profitability; rebalancing to the US, Japan, and EMEA with a disciplined creative and digital plan can restore margin trajectory and protect brand equity within 2-3 quarters.

Executive Summary

Loewe delivered 9.2% revenue growth to €885.3m in 2024 but saw operating profit fall 20.6% and net profit decline 24.3% amid higher operating expenses, Asian softness ex-Japan, and a creative leadership transition. For LVMH, the result introduces margin pressure in Fashion and Leather Goods, while strong momentum in the US, Japan, and EMEA offers a path to re-balance; Proenza Schouler's founders now leading Loewe must defend brand heat and restore profitability within 2-3 quarters.

Actionable Insights

Immediate Actions (Next 30-90 days)
Launch a 90-day margin recovery program targeting 200-300 bps operating margin uplift via SGandA freeze, store labor optimization, and SKU mix shift toward top 50 leather SKUs with 5-7 pp higher gross margin.
Rationale: Operating profit fell 20.6% despite top-line growth; rapid cost and mix levers can restore earnings while creative transition beds in.
Role affected:CEO
Urgency level:immediate
Rationalize 15-20% of low-velocity SKUs in Asia ex-Japan and raise AUR 3-5% on hero products in US and Japan; prioritize inventory to top 30 doors with 30% higher sell-through.
Rationale: SKU and inventory focus improves sell-through, protects brand equity, and supports margin recovery where demand is strongest.
Role affected:Chief Merchandising Officer
Urgency level:immediate
Short-term Actions (6-12 months)
Reallocate 10-15% of global media from Asia ex-Japan to US, Japan, and EMEA; orchestrate a 3-wave communications plan introducing the new creative direction with teaser, runway, and store activation milestones over 6 months.
Rationale: US and Japan grew 31% and 27.6% respectively; amplifying proven demand centers while managing the creative handover will defend revenue and brand heat.
Role affected:CMO
Urgency level:short-term
Strategic Actions
Target ecommerce mix from 2.4% to 5% in 12 months by funding a CX overhaul, rolling out WeChat mini-programs and 24S integration tests, and setting a 2.0 pp conversion uplift goal; hedge CNY and JPY exposures for the next 4 quarters.
Rationale: Ecommerce decline of 13.5% is a fixable drag; modest digital growth can add €18-25m incremental revenue at high contribution and reduce Asia volatility.
Role affected:CFO
Urgency level:strategic

Strategic Analysis

Next 30-90 days will focus on stabilizing top-line in Asia ex-Japan, protecting gross margin, and managing the creative transition messaging from Jonathan Anderson to Jack McCollough and Lazaro Hernandez. Expect tightened opex discipline, selective price integrity enforcement, and marketing reallocation toward high-velocity markets US, Japan, and EMEA.

Over 6-12 months, Loewe must re-baseline growth at high single digits and recoup 200-300 bps of operating margin via mix upgrade, cost containment, and digital acceleration. LVMH can leverage Dior's halo from Anderson while ensuring Loewe's new aesthetic under Proenza Schouler founders evolves distinctively to avoid intra-portfolio cannibalization; success would reset Loewe as a durable growth engine across leather goods and RTW with expanded omnichannel penetration.

Hermes continues to outpace the sector on scarcity and timeless leather; Prada-Miu Miu is capturing fashion heat with Gen-Z; Gucci remains in reset. Loewe's deceleration weakens its recent share gains in Asia, but double-digit growth in US and Japan provides a wedge to capture spend from Kering and Capri peers. Dior may benefit from Anderson's move, raising the bar for Loewe's creative differentiation and campaign effectiveness.

Suppliers face potential order rescheduling toward US and Japan SKUs and tighter MOQs to preserve cash conversion. Wholesale partners may see constrained allocations in Asia ex-Japan and deeper assortments in North America. Customers should expect continued price discipline in hero SKUs and more novelty-driven capsules to spark demand; digital customers face improved CX as ecommerce investments address conversion weakness.

Risks & Opportunities

Primary Risks

  • Creative transition risk leading to demand softness and lower full-price sell-through in the next 2-3 drops
  • Prolonged Asia ex-Japan weakness and FX headwinds compressing gross margin and cash conversion
  • Digital underinvestment prolonging ecommerce share below 3%, ceding online demand to competitors

Primary Opportunities

  • US and Japan momentum to scale leather icons and limited editions, adding €50-70m revenue in 12 months
  • Dior halo effect from Anderson's move to elevate LVMH traffic and cross-sell while sharpening Loewe's differentiation
  • EMEA tourism recovery and retail productivity gains to lift store EBITDA by 150-200 bps

Market Context

The 2024 luxury slowdown, driven by China softness and normalization post-pandemic, is pressuring mid-tier discretionary purchases while ultra-luxury remains resilient. Gen-Z shifts favor brands with cultural credibility and strong storytelling, advantages Loewe must preserve post-Anderson. Competitively, Hermes remains supply constrained with sustained demand, Prada-Miu Miu gains share via fashion-forward product, and Kering's key houses are mid-reset. Within LVMH, Dior momentum is strong; maintaining clear positioning between Dior and Loewe is essential to avoid overlap in RTW and leather goods while leveraging group media and retail muscle.

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