Luxury conglomerate LVMH, once Europe’s most valuable listed company, recorded a substantial deceleration in its organic sales growth, reaching just 1% in the three months ending September. This figure fell short of expectations and marked a decrease from the 3% growth reported in the second quarter.
The company, which owns prestigious brands such as Louis Vuitton, Dior, Celine, and drinks maker Hennessy, posted total revenue of €18.5 billion for the third quarter. This represented a 1.2% year-on-year revenue increase, following a marginal 0.1% rise in the second quarter and a 5.9% decline in the first quarter of the year. For the first nine months of the year, overall sales stood at €57.1 billion, with organic sales up 2%.
LVMH acknowledged its diverse business portfolio in a statement, highlighting its role in providing resilience amidst an uncertain geopolitical and economic landscape. While the company noted good sales growth in the United States, Europe, and Japan, it faced a more challenging environment in China, the world's second-largest economy.
This weaker demand in China significantly impacted the fashion and leather goods segment, which experienced a 5% organic sales drop. This decline was steeper than the approximately 2% fall anticipated by analysts, according to Deutsche Bank. The segment's setback was particularly notable as it followed its first organic sales gain in two years during the previous quarter.
Adding to the challenges, Louis Vuitton's public image in China suffered after the brand successfully sued local tea company Molly Tea for logo infringement. Despite winning the case, the dispute sparked widespread indignation on social media and calls for a boycott of the luxury brand.
In contrast to the fashion and leather goods division, other segments of LVMH demonstrated stronger performance. The selective retailing division, which includes the Sephora perfume and cosmetics chain, achieved an 8% organic sales increase. Both the watches and jewellery segment and the wines and spirits segment reported solid 6% organic gains.
Analysts at Deutsche Bank suggested that these results could lead to further cuts in earnings forecasts for the second half of 2026 and 2027. They commented, “It is hard to see what could change investor sentiment in the short term,” though they characterized the current weakness as cyclical rather than structural. LVMH itself stated that while recovery is taking longer due to the weaker Chinese demand, it does not view the issue as structural. The company anticipates that its brand initiatives are yielding results and expects these bottom-up measures to be more gradual.
