LVMH Sales Miss Expectations

LVMH reported a bigger-than-anticipated drop in first-quarter sales as the sector’s downturn showed little sign of abating.

Sales fell 5 percent on an organic basis in the key fashion and leather goods division, whose biggest brands include Louis Vuitton, Dior, Fendi and Loewe. Analysts had forecast a 1 to 2 percent dip. Shares on Tuesday morning fell 7.5 percent.

LVMH is installing new talent in the executive ranks and top creative roles at its biggest brands, and said it is controlling costs to mitigate the impact of falling sales, inflation and other factors on its bottom line.

But even luxury’s biggest company has little influence over what could be the biggest drag on sales and profits going forward: The rapidly escalating trade war between the US and China has seen steep tariffs and retaliatory measures disrupt supply chains and dampen spending already. A speedy recovery looks increasingly unlikely as consumer confidence plunges amid the uncertainty, particularly among less-wealthy “aspirational” luxury customers.

Asia was the weakest-performing region, with sales falling 1 percent in Japan and tumbling 11 percent in the broader region including the key Chinese market.

Sales in the US, whose economic resilience going into 2025 had been hoped to fuel the luxury industry this year, were down 3 percent.

That was mainly due to wine and spirits, which has a higher exposure to less-wealthy “aspirational” customers, the group said. “American demand continued to be positive over the quarter for fashion,” Cabanis said, while Sephora “continues to be very strong and gain market share.”

But the potential impact of tariffs, as well as the uncertainty stemming from off- and on-again policies, has left luxury brands bracing for a rocky road ahead. “The US political context might not have helped on demand in recent weeks,” Cabanis admitted. “We hope the US [negotiations with the EU] will bring some positive outcome, but it’s not under our control.”

Group revenues fell 3 percent, with no divisions reporting growth. Wine and spirits experienced the steepest decline, with sales down 9 percent, while watches and jewellery was the most resilient division, reporting flat sales. The perfume and cosmetics segment, which includes Parfums Christian Dior and the retailing division operating Sephora and DFS both fell by 1 percent.

Gloomy Start Heightens Tariff Fears

The across-the-board sluggishness last quarter is a worrying sign for the luxury sector, as macro-economic conditions have further deteriorated in recent weeks.

“With highly elevated US (and global) economic uncertainty, it is difficult to build a credible scenario of sequential revenue improvement in 2Q or 3Q for LVMH and the luxury sector at this stage,” Citi analyst Thomas Chauvet said.

A gloomy start to the year at LVMH is likely to drive down expectations for competitors as well. “These results confirm softer than expected trends across divisions, and given LVMH’s bellwether status will likely also read-across negatively to the wider luxury sector,” RBC analyst Piral Dadhania said.

LVMH touted efforts to control costs — “mitigating” the impact of falling sales, inflation and tariff risk — but said it was working to balance those cuts with investments in creativity, product development, marketing and retail to “preserve its competitive edge.”

“Of course we would prefer to have growth [rather than cost cutting] as a lever to improve the margin,” Cabanis said. “We want to make sure we exit this downturn cycle very strong and ready.”

Creative Refresh

In LVMH’s fashion division, the group is working on recasting its creative ranks: New designers at Dior and Fendi have yet to be announced since Kim Jones left the group, and Givenchy debuted Sarah Burton’s revamped vision in March. The changes are hoped to re-excite customers whose love affair with luxury brands has cooled following its post-coronavirus boom.

The group does not break out numbers for individual brands, but it acknowledged that while Louis Vuitton performed slightly above the division’s average, Dior’s performance remained more deeply impacted. The brand’s more fashion-driven vision seems to have made it more susceptible to customer fatigue after a wave of unprecedented growth and steep price increases.

“Dior seems to be the most important problem in the fashion and leather goods division — changes in creative responsibilities are being slow to appear,” Solca said.

The brand is keeping a tight lid on future plans, which reportedly include bringing on Jonathan Anderson as creative director for women’s as well as men’s. Anderson and Loewe skipped two ready-to-wear shows this year before his exited from the brand in March, as well as forgoing both men’s and women’s shows for his namesake label. Sources say the designer is busily preparing his Dior takeover at a parallel studio.

Dior is expected to stage two more shows by current creative director Maria Grazia Chiuri (in Kyoto and Rome) before formalising a move.

In addition to its creative revamps and product launches, the group sought to re-engage Asian customers with immersive marketing initiatives including the latest staging of Dior’s “Designer of Dreams” retrospective in South Korea, a Loro Piana exhibition in Shanghai and a Loewe exhibition in Tokyo.

Chart by Joan Kennedy.

Stay tuned to BoF for updates on this developing story.

Disclosure: LVMH is part of a group of investors who, together, hold a minority interest in The Business of Fashion. All investors have signed shareholders’ documentation guaranteeing BoF’s complete editorial independence.