LVMH sales miss growth forecasts as China luxury demand slows

Fashion conglomerate LVMH reported a revenue of €18.5 billion for the three months ending at the end of September, marking a 1.2% increase year-on-year. The firm, which owns brands such as Louis Vuitton, Dior, Celine, and Hennessy, experienced a 0.1% growth in the second quarter and a 5.9% decline in the first quarter. However, organic sales growth, which excludes currency movements and changes to the group's business portfolio, fell short of expectations, reaching just 1% in the third quarter compared to 3% in the second quarter.

Sales in the first nine months amounted to €57.1 billion, with organic sales rising by 2%. LVMH expressed satisfaction with its diversified business portfolio, stating it provided resilience in an unpredictable geopolitical and economic climate. However, China's market posed challenges, with sales in the fashion and leather goods segment dropping by 5% on an organic basis due to reduced demand in the world's second-largest economy.

This decline exceeded the roughly 2% fall anticipated by analysts, as per Deutsche Bank. The controversy surrounding Louis Vuitton's lawsuit against local tea company Molly Tea for allegedly copying its logo also had a negative impact on the brand's public image in China, sparking social media outrage and calls for a boycott. Despite these setbacks, LVMH's selective retailing division, including the Sephora perfume and cosmetics retail chain, saw an 8% increase in organic sales, while the watches and jewelry, and wines and spirits segments managed 6% organic growth.

Deutsche Bank analysts suggested that these results might lead to further adjustments in earnings forecasts for the second half of 2026 and 2027. The company acknowledged that recovery would be slower due to the weaker Chinese demand, but they did not view it as a structural issue. Instead, they attributed the weakness to cyclical factors and expected bottom-up measures, such as brand initiatives, to yield more gradual improvements.

LVMH's share price has plummeted nearly 40% since the beginning of the year, and in September, it was overtaken by L'Oréal as France's most valuable listed company. As of 10am CEST in Paris, LVMH's share price was trading around 1.6% lower.