LVMH’s fashion and leather goods division returned to negative growth in the third quarter, as softer demand in China weighed on sales at some of the world’s biggest luxury brands, including Louis Vuitton, Dior and Loro Piana.
The division recorded a 5 per cent decline in organic revenue for the three months ended September 30, reversing the improvement seen in the second quarter, when it ended a two-year run of quarterly declines. The latest result also fell short of analysts’ expectations for a 1.6 per cent decrease, highlighting the continuing challenges facing the luxury group’s core business.
Analysts had lowered their forecasts in recent weeks amid concerns about China’s crackdown on wealthy individuals’ tax affairs and the backlash surrounding Louis Vuitton’s trademark dispute with Chinese tea chain Molly. The dispute reportedly fuelled nationalist sentiment, adding further uncertainty to the brand’s performance in the market.
Mixed Results Across LVMH’s Luxury Portfolio
Louis Vuitton Spring 2027 Ready-to-Wear Collection at Paris Fashion Week
Despite the weakness in fashion and leather goods, LVMH reported a 1 per cent increase in third-quarter group revenue to €18.50 billion, broadly matching market expectations. Organic revenue also grew by 1 per cent, with the company pointing to more subdued business conditions in China alongside stronger growth in the United States, Europe and Japan.
Other divisions delivered a more resilient performance. Wines and spirits recorded 6 per cent organic sales growth, while watches and jewellery also increased by 6 per cent. Selective retailing rose 8 per cent, whereas perfumes and cosmetics revenue remained unchanged during the quarter.
The results come as investors continue to assess the outlook for luxury spending globally. Data tracked by Citi showed that US credit card spending on luxury goods declined for a third consecutive month in September, raising questions about whether demand in the world’s largest luxury market is beginning to normalize.
LVMH has also faced pressure in financial markets. Its shares have fallen by more than 41 per cent this year, costing the group its position as France’s most valuable company to L’Oréal and pushing chairman and chief executive Bernard Arnault out of the top 10 of the Bloomberg Billionaires Index.
HSBC downgraded LVMH to Hold from Buy last month and cut its price target to €490 from €600, citing the weight of the fashion and leather goods division. The bank said it remained confident in the group’s longer-term growth potential but adopted a more cautious stance because of the challenging economic environment and a slower-than-expected recovery at Dior.
Morningstar senior equity analyst Jelena Sokolova said investors would be looking for signs that Chinese consumer demand is stabilizing and for further insight into the performance of LVMH’s flagship division. She highlighted the potential importance of Dior’s new collections and Louis Vuitton’s upcoming product pipeline in restoring stronger performance.
Nevertheless, Sokolova maintained that the group’s medium-term prospects remain encouraging. She argued that LVMH’s brand strength and competitive position continue to offer long-term value, despite the difficulties currently affecting the luxury market.
The latest figures underscore the growing importance of China’s recovery to LVMH’s performance. While strength across several other divisions has helped support group revenue, a sustained improvement in fashion and leather goods will likely be crucial to rebuilding investor confidence.
