Bernard Arnault’s luxury fashion group LVMH on Wednesday led its rivals’ shares downward after it reported disappointing sales on weak China demand.

LVMH’s fashion and leather goods unit – including iconic brands like Louis Vuitton and Dior – posted a 5% decline in sales, well below expectations of 4% growth. It was the division’s first sales drop since 2020. 

The company reported a 3% drop in revenue on an organic basis, excluding the effects of currencies, acquisitions and divestitures, which fell below estimates of 2% organic growth.

The world’s largest luxury group saw its shares tumble as much as 7.5% Wednesday morning to a two-year low before ticking back up by the afternoon. 

Its high-end competitors followed suit. L’Oreal shares were down 1.59% and Hermes shares were down 0.53% Wednesday afternoon.

“LVMH being the sector proxy for many, this print will inevitably cause more short-term volatility,” Flavio Cereda, co-manager of GAM’s Luxury Brands investment strategy, a fund that owns shares in luxury stocks, told Reuters.

Founder and CEO Bernard Arnault – who was the world’s wealthiest person just 18 months ago – lost $7.3 billion on Wednesday as the company’s shares tumbled, according to Forbes.

Arnault is the fifth-richest person in the world, with a net worth of $166.7 billion, according to Forbes.

The region including China was LVMH’s worst performer as Chinese consumers continue to pull back on high-end purchases.

The company’s US division did not fare much better — showing slow growth and spelling widespread troubles for LVMH.

LVMH executives provided little comfort to investors, further stoking the sell-off flames.

When asked about the company outlook, LVMH Chief Financial Officer Jean-Jacques Guiony on Tuesday said: “I’ve no idea.”

“The visibility of our business is as good as yesterday’s sales. We’ve been through ups and downs,” Guiony said. “The only thing we know, when the business is bad, usually it’s good thereafter. It’s a cyclical business.”

Organic sales plunged 16% in the company’s division that includes China, a larger drop than expected. It was the region’s third negative quarterly performance in a row.

Consumers in China have cut back sharply on spending because of a weak property market and uncertain jobs outlook.

Chinese authorities launched a stimulus package last month in an effort to boost spending, but consumer sentiment remains low.

“Consumer confidence in mainland China today is back in line with the all-time low reached during Covid,” Guiony said. 

While it is difficult to assess how well the stimulus package will work, “it shows that they are taking the issue very seriously,” Guiony said. 

There are no signs the Chinese government’s efforts have changed consumer behavior, Citigroup said in a note, basing its insight on activity at a luxury mall in Eastern China during the Golden Week holiday.

Mall sales declined by a percentage in the low-teens as middle-class consumers – hit by China’s weaker property prices – pumped the brakes on high-end shopping, Citigroup said.

Meanwhile, former president Donald Trump has vowed to enact high tariffs, if he is re-elected, that could put a strain on Hennessy, LVMH’s cognac, in China.