LVMH’s luxury recovery falters as Louis Vuitton and Dior owner hit by China slowdown

LVMH’s fashion and leather goods revenue fell 5% in the third quarter from a year earlier. That was weaker than the 1.8% decline analysts had expected. It also reversed the division’s first growth period in two years, reported in the previous quarter.

The division matters because it contains LVMH’s most visible fashion brands, including Louis Vuitton and Dior. Its results often serve as a health check for the wider luxury market. The business benefited from the buoyant US market, but weaker Chinese demand pulled performance down. A logistics problem also reduced Louis Vuitton’s growth by about one percentage point.

The setback suggests the luxury recovery is taking longer than hoped. LVMH’s finance chief said the change in China’s consumer backdrop was delaying recovery, rather than damaging it permanently. Investors will watch whether Louis Vuitton and Dior can regain momentum as China remains weak and US growth slows.

LVMH is a major luxury group controlled by the family of chief executive Bernard Arnault. The company operates across several luxury categories rather than relying on one label or product type. Its group sales reached €18.5 billion in the third quarter on an organic basis.

Its best-known fashion brands include Louis Vuitton and Dior. Beyond fashion, LVMH owns or operates watches and jewellery businesses, the wines and spirits company Moët Hennessy, and selective retailing businesses such as beauty retailer Sephora. These divisions give the group several sources of revenue.

That breadth mattered during the recent downturn. Fashion and leather goods weakened, but jewellery, wines and spirits, and selective retailing helped support total sales. In the third quarter, group revenue still rose 1%, even though its most important fashion division fell 5%. The mix softened the impact of weakness in China.

LVMH’s regional performance split sharply in the third quarter. Sales in Asia excluding Japan fell 5% from a year earlier, with China responsible for much of the decline. The region became a major drag as hopes for a Chinese recovery faded.

The United States remained positive, but momentum eased. US sales grew 5% in the third quarter, down slightly from 6% in the second quarter. LVMH said its fashion and accessories business continued to benefit from the buoyant US market, although separate Citibank credit-card data showed US luxury spending fell at least 4% in each of the previous three months.

Despite these pressures, total group sales increased 1% organically to €18.5 billion. Analysts had expected 1.3% growth. Jewellery and selective retailing, particularly Sephora, helped offset the regional and fashion weakness, while wines and spirits also grew.

Chinese demand matters because its weakness is directly affecting LVMH’s regional results. Sales in Asia excluding Japan fell 5% in the third quarter, and LVMH specifically linked the fashion and accessories slowdown to China. The downturn has therefore become a central test of luxury’s recovery.

The country’s real-estate troubles have reduced confidence and spending power, especially among consumers who aspire to buy luxury goods. Louis Vuitton also faced a backlash after suing tea brand Molly Tea over trademark infringement. Critics questioned its claim to a four-petal flower design resembling traditional Chinese motifs.

The impact reaches beyond one quarter. China’s weakness has helped drive uncertainty about when the nearly four-year luxury downturn will end. LVMH’s finance chief said the recovery was being delayed, not structurally impaired. However, the company’s share price has fallen nearly 40% this year as investors search for growth.

Aspirational luxury consumers are people who want expensive brands but are more sensitive to economic pressure than the wealthiest customers. When confidence or spending power falls, they can postpone purchases or choose less expensive options. This reduces demand for fashion, leather goods, and other discretionary products.

The article links this pressure to inflation, geopolitical turmoil, conflict in the Middle East, and China’s real-estate troubles. These forces make households more cautious. LVMH’s fashion and leather goods sales consequently fell 5% in the third quarter, while the company said weaker Chinese demand had delayed the recovery.

The consequences extend to companies and investors. Luxury brands face slower sales and tougher comparisons, even at the top end of the market. LVMH’s share price was down nearly 40% for the year, and its market value had more than halved from its 2023 peak. Other brands, including Hermès, were also expected to face pressure.

LVMH’s diversified structure softened the blow from its struggling fashion and leather goods division. While that business fell 5% in the third quarter, total group sales still rose 1% organically to €18.5 billion. Growth came from businesses with different products and consumer drivers.

Jewellery was the clearest bright spot. Sales in LVMH’s watches and jewellery division increased 6% from the previous year. The wines and spirits business, Moët Hennessy, also grew 6%. Selective retailing contributed as well, notably through beauty retailer Sephora, which LVMH identified as a source of strong demand.

These businesses did not erase the fashion decline, but they helped offset it at group level. Their performance shows why LVMH’s range of divisions matters during a downturn. Still, the group remains exposed to luxury spending overall, and slowing US growth plus weak Chinese demand could test the offsetting effect.

The article links China’s real-estate troubles with weaker confidence and spending power. When property conditions deteriorate, consumers may become more cautious about discretionary purchases, including expensive fashion, jewellery, and accessories. Luxury purchases are easier to delay than essential spending.

That mechanism affects LVMH directly. The group said demand in China slowed in the third quarter, helping push Asia excluding Japan sales down 5%. The weakness also contributed to a 5% decline in fashion and leather goods, despite continued benefit from the US market. China’s property problems therefore became a sales issue for a global luxury group.

The article does not describe every international transmission channel. But its figures show the broader consequence: Chinese weakness can reduce results for brands that sell across regions. It also delays the industry’s recovery and forces companies to rely more heavily on markets such as the United States and businesses such as jewellery and Sephora.