Luxury powerhouse LVMH has reported a sharp fall in fashion and leather goods sales, as affluent shoppers in the United States and China cut back amid economic uncertainty, trade tensions, and cautious consumer sentiment.
The division behind iconic labels such as Louis Vuitton, Dior, and Givenchy saw organic sales drop 9 per cent in the second quarter to €9 billion, deepening from a 5 per cent decline in the previous quarter. The slump marked the steepest contraction among the group’s five business segments and raises concerns for the broader luxury sector, which has relied heavily on discretionary spending from high-income consumers.
Shares in LVMH fell 2 per cent to €470.25, extending a broader slide that has seen the stock fall 28 per cent over the past year.
For the first half of 2025, fashion and leather goods sales were down 7 per cent on an organic basis to €20.7 billion, while recurring operating profit in the segment declined 18 per cent to €6.6 billion. LVMH blamed tough comparisons with the same period last year, which had been buoyed by a rebound in global tourism—particularly in Japan.
Group-wide, second-quarter revenue fell 4 per cent organically to €19.5 billion, while first-half sales dropped 3 per cent to €39.8 billion. Operating income before non-recurring items came in at €9 billion, down from €10.65 billion a year earlier, broadly in line with analyst expectations.
The decline was not limited to fashion. LVMH’s wines and spirits division, home to Moët & Chandon and Hennessy, also saw revenue and profits fall, citing weaker demand in the US and China and a sluggish market for cognac. Organic revenue in the unit fell 4 per cent in Q2, bringing the first-half decline to 7 per cent.
There was a modest improvement in champagne sales, but it was not enough to offset overall weakness. Meanwhile, jewellery sales were flat, with LVMH’s portfolio of brands including Bulgari and Tiffany & Co. failing to post growth amid a cautious consumer climate.
Trade concerns loom, but pricing power remains
Speaking on the results, Chief Financial Officer Cécile Cabanis said the macroeconomic environment remained “full of uncertainty”, but expressed “cautious optimism” for the rest of the year. She pointed to potential progress in trade talks between the EU and the US, with President Trump recently softening rhetoric on a proposed 15 per cent general tariff on EU imports.
Cabanis suggested such a move could ultimately benefit sentiment among LVMH’s customer base.
“It would be an overall good outcome for the general mood of our clients,” she said.
While tariffs remain a risk, Cabanis noted that many LVMH brands still retain pricing power, allowing the group to adjust prices and protect margins if needed. To mitigate future trade exposure, LVMH also announced plans to open a new factory in Texas by 2027, further deepening its manufacturing footprint in the US.
In light of the challenging backdrop, LVMH is reassessing its portfolio, with Cabanis confirming the group will not retain any brands that fail to meet profitability thresholds. She cited the recent divestments of stakes in Off-White and Stella McCartney as part of a broader strategic repositioning.
LVMH, led by billionaire Bernard Arnault, owns 75 luxury brands and remains the world’s most valuable luxury goods group with a market capitalisation of €233 billion. However, 2025 has proven difficult for the sector as a whole, with Chinese consumer confidence hit by a property downturn and the US luxury market showing signs of fatigue.
While rivals such as Richemont have managed to offset weakness in watches and fashion with growth in jewellery, LVMH’s diversified model has been unable to escape the broader slowdown.
Still, Cabanis expressed confidence in the group’s long-term outlook, stating:
“We remain agile, committed to innovation, and focused on markets where brand equity and heritage still carry weight. There will be turbulence, but we are well-positioned for the recovery.”
