LVMH’s results were closely watched this quarter. The luxury industry’s bellwether stock is down 9% since China’s President

Xi Jinping

made a speech in mid-August promising a crackdown on “excessive” wealth in the country. Valuations have fallen across the sector, which has become heavily dependent on Chinese spending since the 2008 financial crisis.

On a call with investors, LVMH management said Beijing’s new focus on wealth redistribution isn’t necessarily a bad thing for the well-heeled consumers that buy its goods. Up to 80% of luxury sales in China are made to middle-class rather than ultrarich shoppers, according to UBS estimates. They may have greater spending power if income is shared more fairly.

But that long-term hope isn’t necessarily at odds with worries that the sector could find it harder to grow for a year or two. One hint of tougher times came from LVMH’s watches and jewelry division, where sales increased just 1% versus the comparable period of 2019—down from 9% growth in the previous quarter. Demand for its expensive jewelry brand Bulgari slowed notably in Asia. Tiffany & Co., which LVMH bought last year for $15.8 billion, was also a bit weaker in China throughout August.

This may simply be because parts of the country were back in lockdown after a spike of Covid-19 cases. Or, it could be a very early sign that China’s wealthiest consumers are wary of making splashy purchases at the moment. Investors should get a clearer picture of what is happening in November, when Cartier’s Swiss owner Cie. Financière Richemont reports results.

LVMH’s shares now trade at around 28 times projected earnings, down from 32 times before Mr. Xi’s speech, and their cheapest multiple in 16 months. But it remains very early to judge the effects of Beijing’s latest policy shifts. Most investors may prefer to delay any major purchases until the tea leaves settle.

Write to Carol Ryan at carol.ryan@wsj.com

Corrections & Amplifications
LVMH’s shares now trade at around 28 times projected earnings, down from 32 times before Mr. Xi’s speech. An earlier version of this column incorrectly referred to Mr. Xi as Mr. Jinping. (Corrected on Oct. 15, 2021)