LVMH sales miss growth forecasts as China luxury demand slows
LVMH Faces Slower Momentum as Chinese Luxury Demand Weakens
Poinews.com – LVMH’s recovery lost pace in the third quarter as softer spending in China weighed on its crucial fashion and leather goods operations, despite stronger performances from Sephora, jewellery and drinks.
The luxury group generated €18.5 billion in revenue during the three months ending in September, representing a 1.2% increase from a year earlier. That marked an improvement on the 5.9% decline recorded in the first quarter and the modest 0.1% advance in the second, but underlying growth did not meet market expectations.
Organic revenue growth, which removes the effects of exchange-rate changes and shifts in the company’s business perimeter, slowed to 1% in the third quarter from 3% in the preceding period. Across the first nine months of the year, LVMH posted sales of €57.1 billion, while organic sales rose 2%.
Fashion division falls back after brief improvement
The fashion and leather goods business, home to brands including Louis Vuitton, Dior and Celine, experienced a 5% organic decline. The result was notably weaker than the roughly 2% drop anticipated by Deutsche Bank analysts.
The division had only recently shown signs of improvement, delivering its first organic sales increase in two years during the previous quarter. The renewed decline underlines the difficulty of restoring growth in a market where demand from China remains subdued.
China has long been an important source of luxury spending, making the country’s weaker environment a significant factor for global high-end brands. LVMH said conditions were more supportive in the United States, Europe and Japan, where sales growth was solid. Its broad collection of businesses helped cushion the impact from the less favourable Chinese market.
The group said its diversified portfolio offered resilience while geopolitical and economic uncertainty continued to shape consumer behaviour. That range extends beyond handbags and fashion to jewellery, cosmetics retailing, champagne, cognac and other premium products.
Sephora, jewellery and spirits provide support
Selective retailing was the strongest of LVMH’s major divisions during the quarter. The segment, which includes Sephora’s global beauty retail network, recorded organic growth of 8%.
Watches and jewellery also advanced, with organic sales up 6%. Wines and spirits achieved the same 6% increase, offering further support at a time when the fashion business was under pressure.
These gains demonstrate why investors often view LVMH as more than a single-brand luxury company. Its businesses serve different customer needs and categories, so stronger demand in beauty, jewellery or retail can partly offset weakness in leather goods. Even so, fashion and leather goods remain central to the group’s profile and profitability, making the segment’s decline especially closely watched.
China dispute adds to pressure on Louis Vuitton
Louis Vuitton also faced a reputational challenge in China following its legal action against local tea company Molly Tea over an allegedly copied logo. The luxury brand won the case, yet the dispute triggered anger on social media and prompted calls for a boycott.
The episode arrived during a period when brands are working to preserve relevance and goodwill among Chinese consumers. While the quarterly figures reflect broader demand conditions rather than one single event, the controversy added an unwanted public-relations dimension to an already difficult market backdrop.
Analysts see a longer recovery, not a structural break
Deutsche Bank analysts said the figures may lead to further reductions in earnings estimates for the second half of 2026 and for 2027. They warned that a near-term improvement in investor confidence may be difficult to identify.
“It is hard to see what could change investor sentiment in the short term,” they wrote.
Still, the analysts characterised the weakness as cyclical rather than structural. In practical terms, that view suggests demand is being held back by current economic conditions and consumer caution, rather than indicating a permanent loss of appeal for LVMH’s brands.
“Overall, recovery is taking longer due to the weaker Chinese demand, but the company do not see it as a structural issue. Brand initiatives are producing results and they expect these bottom-up measures to be more gradual,” they wrote.
That assessment places attention on the pace of recovery rather than the direction of travel. Brand-specific initiatives may support performance over time, but the third-quarter results indicate that such efforts are unlikely to produce an immediate turnaround while Chinese demand remains fragile.
Shares remain under strain
LVMH’s stock has fallen nearly 40% since the beginning of the year, reflecting investor concern over the group’s slower growth trajectory. In September, L’Oréal moved ahead of LVMH to become France’s most valuable listed company, a notable shift for a business that was once Europe’s most valuable publicly traded company.
By around 10am CEST in Paris, LVMH shares were down more than 1.6%. The market reaction reflected the gap between the company’s uneven divisional performance and hopes that the fashion and leather goods division had begun a more sustained recovery.
For LVMH, the next phase will depend heavily on whether demand in China stabilises and whether growth in its other businesses can continue to soften the effect of weaker luxury purchases. The third-quarter update showed that the group retains important areas of strength, but also that its return to stronger overall growth is taking longer than investors had hoped.
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