Shares of luxury goods makers like Tiffany (TIF), Swatch Group (SWGAY), Burberry Group (BURBY) and Signet Jewelers (SIG) are dropping after LVMH Moet Hennessy Louis Vuitton (LVMUY) reported earnings yesterday.

LVMH EARNINGS: On Tuesday, LMVH reported revenue growth of 10%, reaching EUR33.1B in the first nine months of 2018. The company said organic revenue grew 11% compared to the same period in 2017, and 13% excluding the impact of the airport concession closures in Hong Kong at the end of 2017. In the third quarter, revenue was up 10% compared to the same period in 2017, a performance which continued the trend recorded in the first half of the year and to which all business groups contributed, according to the company.

OUTLOOK: Along with reporting earnings, the company said, "In an uncertain geopolitical and monetary context, LVMH will continue to be vigilant. The group will pursue its strategy focused on innovation and targeted geographic expansion in the most promising markets. LVMH will rely on the power of its brands and the talent of its teams to further extend its global leadership in the luxury market in 2018".

CHINA CRACKDOWN: LVMH Chief Financial Officer Jean-Jacques Guiony said on the company's earnings conference call that growth in the Louis Vuitton brand's sales to Chinese customers slowed slightly in Q3 to a percentage in the mid-teens. "The Chinese authorities have some laws with regards to importation of goods and luxury goods, these laws are being enforced with more strength at some point in time, which is exactly what we understand is happening. There is nothing wrong with that. It doesn't prevent people real tourists from purchasing goods outside of China," he said. The remark follows reports that Chinese customs authorities are ramping up border checks on returning travelers. The CFO noted that some Chinese residents buy the company's products on trips overseas, where they are cheaper, and then sell them at a profit when they return, undercutting company stores in China. The parallel market "is not something that we welcome and that we try to promote," Guiony said. "We limit the number of products that people can buy in stores, particularly in Paris, so that, parallel with our own actions in the European market, we try to avoid this as much as we can. Obviously, there are limits to the control you can exert over that." He added the company has no plans to equalize prices in China and abroad.

PRICE ACTION: In late morning trading, shares of LVMH trading in New York dropped 8.2% to $61.13, while Tiffany fell 7.4%, Swatch Group dropped 5.7%, Burberry Group was down 8.2% and Signet Jewelers fell 1.3%.