Editor’s Note
This article highlights a positive shift for the luxury sector, with LVMH reporting its first sales increase in a challenging economic climate, sparking a significant rally in its share price and boosting the broader market.
LVMH sends encouraging signals: its sales increase marginally and its stock soars. The owner of Louis Vuitton and Dior rises 12.5% on the stock market and boosts the valuation of other luxury firms.
A Louis Vuitton store on the Champs-Élysées in Paris.
Stephanie Lecocq (REUTERS)
C. Castelló
Finally, the luxury sector sees light at the end of the tunnel. In an environment of economic uncertainty, LVMH, an emblem within the industry, announced after market close on Tuesday the first sales increase of the year. A modest 1% rise in the third quarter was enough to send its shares soaring and boost luxury companies on the stock market. LVMH shares are up 12.5% and encourage others like Kering (owner of Gucci), which adds 4.8%. Christian Dior advances 12.5%; Prada adds 7.7%; Hermès, 7.3%; and Moncler, 7.8%.
The quarterly organic sales of the group controlled by French billionaire Bernard Arnault, who also owns brands like Dior, the jewelry house Tiffany, champagne Moet & Chandon, and the beauty chain Sephora, reached 18.28 billion euros between June and September, a 1% increase in organic terms (excluding currency effects), while the consensus among analysts expected a 1% decline. And although the fashion and leather goods division, one of its pillars, saw a 2% drop in sales, the good news was that the decline moderated compared to the 9% suffered in the previous quarter.
The luxury sector has suffered a prolonged decline in demand since the post-pandemic boom ended. The tariff barrage from Donald Trump and the worst economic growth prospects, especially in China, along with rising costs, have taken a toll on LVMH, which is down 5% for the year.
For their part, Bloomberg Intelligence analysts Deborah Aitken and Andrea Ferdinando Leggieri point out that the improvement in LVMH’s organic sales growth in the third quarter (1%) “may be more important for boosting confidence than any significant change in consensus, with a return to growth in China and Asia, excluding Japan, and progress in its most relevant brands.”
Analysts have focused on brands’ efforts to bring more affordable products to market, and Morgan Stanley has alluded to an “explosion of creativity” from new designers at most firms, suggesting that perhaps “the worst is over,” according to Reuters. Dior, Celine, Loewe, and Fendi have strengthened their creative teams.
Price increases boosted earnings for brands like Louis Vuitton and Dior in recent years but have affected demand for handbags, especially among less wealthy customers. Factors such as tariffs from US President Donald Trump, the persistent real estate crisis in China, and the recent rise in gold and silver prices, which has increased jewelry production costs, have exacerbated the weakness.
LVMH explains that Europe and the United States remained stable compared to the first nine months of 2024, with solid local demand. Japan recorded a decline compared to the same period in 2024, as growth in tourist spending was offset by the depreciation of the yen. The rest of Asia, including China, experienced “a notable improvement in trends compared to 2024,” the company states in its release.
The rebound boosted LVMH’s valuation, which briefly lost its throne as France’s largest company by market capitalization to its rival Hermès, while analysts began to see positive signals for luxury sales.
