LVMH sees modest growth in the third quarter amid a tense luxury market

A Gradual but Uneven Improvement Across Divisions

The Fashion and Leather Goods division, which accounts for nearly half of the group's revenue and more than two-thirds of its profits, limited its decline to 2% in the third quarter, reporting 8.5 billion euros in revenue. This result marks a notable improvement compared to the second quarter, where the drop was 9%. The group credits this resilience to the strength of local demand, while the year 2024 had benefited from strong growth in tourist spending, especially in Japan.

Louis Vuitton maintained its creative momentum with the latest shows by Nicolas Ghesquière and Pharrell Williams, as well as the opening of The Louis museum space in Shanghai, which attracted a very high number of visitors. The launch of La Beauté Louis Vuitton, a new makeup line led by Pat McGrath, also experienced significant success. At Christian Dior, the new creative director Jonathan Anderson presented his contemporary interpretation of the New Look, with early collections being very well received.

The Selective Retailing division achieved the best performance with a growth of 7%, driven by Sephora, which continues to gain market share in many countries and solidify its position as a global leader. DFS saw improving trends in the third quarter, particularly in Macau and Hong Kong. The Perfumes and Cosmetics, as well as Watches and Jewelry divisions, each grew by 2%, while Wines and Spirits recorded a slight growth of 1% following several challenging quarters, benefiting from sequential improvements in champagnes and a strong performance of Provencal rosé wines.

Geographic Disparities Driven by Exchange Rates and Tourism

Geographic analysis reveals contrasting trends across markets. Asia excluding Japan, a market dominated by China, recorded a 2% growth in the third quarter, marking a notable improvement compared to the first nine months of the year. Chief Financial Officer Cécile Cabanis indicated during the conference call that performance in China is approaching stabilization, even though the country's macroeconomic environment remains unchanged and it will take time to see a full rebound.

The United States showed a 3% organic growth, demonstrating the resilience of local demand despite the challenges posed by the Trump administration's tariffs and budgetary uncertainties. Europe, on the other hand, experienced a 2% decline, impacted by reduced tourist spending and currency fluctuations, which weighed more heavily on the quarter than at the beginning of the year.

Japan saw a 13% contraction, reflecting a high comparison base following the surge in tourist spending in 2024 when the yen was particularly weak. Currency effects accounted for a 5% drag on reported revenues in the third quarter, compared to 2% over the first nine months, highlighting the persistent volatility of the US dollar and the Chinese yuan. In the first half of 2025, LVMH posted revenues of 39.8 billion euros with an operating profit of 9 billion euros, resulting in a margin of 22.6%, down 15% compared to 2024. Local demand remained strong in Europe and the United States during this period.

Creative Renewal and Caution Amid Structural Challenges

LVMH has intensified its creative renewal strategy with several major appointments. On October 14, the day of its earnings release, the group announced the appointment of Maria Grazia Chiuri as the creative director of Fendi, a brand where she began her career in the late 1980s. This appointment follows Jonathan Anderson's transfer from Loewe to Dior, while Michael Rider has taken the helm at Celine and Jack McCollough and Lazaro Hernandez have joined Loewe.

Cecile Cabanis emphasized that the role of a creative director no longer merely involves designing beautiful clothes but also creating a cultural impact. She noted that the group's strategy relies as much on creative renewal as on retail initiatives and performance improvements. The group's environmental program, LIFE 360, has achieved a reduction in greenhouse gas emissions by 55% since 2019, two years ahead of schedule.

Looking ahead, LVMH remains confident yet vigilant amid an uncertain and volatile economic and geopolitical environment. The group continues to focus on enhancing the desirability of its brands, leveraging the authenticity and quality of its products, excellence in distribution, and an agile organization. Analysts are divided on the sector's ability to sustainably rebound, with the global luxury market expected to grow only 1% to 3% annually until 2027, after reaching 1.5 trillion euros in 2023. The fourth quarter will face a challenging comparison base, and management does not anticipate a return to growth until 2026.