Market turns cold on luxury after LVMH’s China letdown

Market sentiment has cooled towards luxury goods following weaker-than-anticipated sales from LVMH, specifically its Louis Vuitton brand, in China. Four sell-side analysts have lowered their price targets on LVMH shares by an average of 9% after the company's first quarterly report as a major player in the luxury sector. The news caused LVMH shares to fall 1.5% by 7.30am GMT (3.30pm Singapore time), with peers Hermes, Kering, and Richemont also experiencing similar declines.

Europe's leading luxury brands, grappling with a three-year slowdown, have collectively lost €330 billion (S$472.79 billion) in market value since the beginning of 2026, with LVMH alone down by approximately 40%.

Despite the recent share price dip, JPMorgan analysts anticipate further pressure on the luxury sector, citing evidence that China's consumer demand for LVMH's flagship Louis Vuitton brand has weakened significantly. In a report to clients, JPMorgan analysts noted that "the Chinese cluster seems to have taken a material (and bigger than feared) step down".

LVMH's fashion and leather goods division, which accounts for nearly half of the group's revenue, reported a 5% decline in organic sales in October, falling short of analysts' expectations. The company attributed the dip to a "less buoyant environment" in China, which drove a 1% overall organic sales growth, excluding currency fluctuations, to €18.5 billion, below expectations of 1.3% growth.

When questioned about Louis Vuitton's recovery prospects during a call with analysts, CFO Cecile Cabanis stated that "it takes a bit of time, but I don’t think there are a lot of shortcuts here."

The slowdown in LVMH's watches and jewelry division, which includes brands such as Bulgari and Tiffany, also contributed to investor concerns. In the first half of 2026, growth in this division slowed to 6% from 9% in the previous period, indicating a shift in one of the luxury industry's few bright spots.