(Bloomberg) -- LVMH’s sales of fashion and leather goods fell for the first time since the pandemic as the industry’s biggest player was hammered by a slump in demand from Chinese consumers whose appetite for high-end purchases once seemed insatiable.

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Organic revenue at the key unit whose brands include Louis Vuitton and Christian Dior declined 5% in the third quarter, LVMH Mo?t Hennessy Louis Vuitton SE said in a statement Tuesday. Analysts had expected a small gain. That was the worst quarterly performance since the second quarter of 2020 when the world went into lockdown. Overall, the group’s sales slid 3%.

“Most of our markets currently face economic challenges including mainland China,” LVMH Chief Financial Officer Jean-Jacques Guiony said during the quarterly presentation, adding that “consumer confidence in mainland China today is back in line with the all-time low reached during Covid.”

With sales of luxury goods in China sagging further in the third quarter, the industry and investors alike are keen to find out if Beijing’s recent string of stimulus measures would help turn-around consumer sentiment and provide a backstop for a market expected to overtake the US as the world’s biggest as soon as the end of this decade.

China Stimulus

Guiony said it was currently hard to assess the potential impact on demand of such measures but “it shows that they are taking the issue very seriously,” he added, referring to the Chinese authorities.

However, early signs are emerging that the policy stimulus may be limited in its scope to lift near-term consumer sentiment. The measures from monetary to regulatory easing unleashed since late September has focused on fueling gains in the beleaguered equity market and shoring up the troubled property sector, without any meaningful boost to the consumption sector.

There’s “no improvement of luxury consumption after the recent macro policy pivot,” Citigroup Inc. said in a note based on its checks with a luxury mall in Eastern China during this month’s Golden Week holiday. The mall saw a low-teens sales decline during the holiday, with middle-class shoppers failing to turn up in numbers as they suffer the negative wealth effects of China’s property price decline, the note said.

Disappointing Show

Organic sales in the region that includes China fell 16% in the quarter at LVMH, more than estimates, a disappointment for a group that had been among the most resilient in the face of cooling demand in the country. Sales in Japan also performed worse than expected as a stronger yen hit spending by Chinese consumers who traveled there to shop for luxury items. Performance in the US and Europe also disappointed.