LVMH fashion sales fall 5% as Chinese demand weakens

LVMH reported on 12 October that its fashion and leather goods division, home to Louis Vuitton and Dior, posted a 5% fall in organic sales in the third quarter, worse than the 1.8% decline analysts had expected in a Visible Alpha consensus. The division, which generates nearly half of group revenue, booked €8.25 billion, down from €8.50 billion a year earlier.

Group organic sales rose 1% to €18.5 billion, short of the 1.3% growth expected. Caixin Global reported on 23 October that Hermès, LVMH and Kering all showed weaker third-quarter sales momentum in China, citing a sluggish economy and new offshore-trust tax rules that added to financial pressure on wealthy consumers. It did not give sales figures for Hermès or Kering.

Asia excluding Japan fell 5% and was the only region down, while the United States grew 5%. Watches and jewellery slowed to 6% growth from 9% in the first half, and selective retailing, home to Sephora, accelerated to 8%. For the first nine months, revenue reached €57.1 billion with organic growth of 2%, while reported revenue fell 2%. Currency movements cut nine-month reported revenue by 3% and changes in consolidation scope reduced it by another 1%.

LVMH said Dior saw strong demand for ready-to-wear and leather goods designed by Jonathan Anderson, and its sales remained positive for the year to date. Louis Vuitton carried a separate problem into the quarter: a trademark dispute with Chinese tea chain Molly Tea over a four-petal flower design drew a backlash online. Cécile Cabanis, the chief financial officer, said the pushback hurt Louis Vuitton at least at the beginning of the period, though the impact was hard to quantify.

Asked about the brand's recovery on the analyst call, Cabanis said: "It takes a bit of time, but I don't think there are a lot of shortcuts here." She also rejected the idea that Chinese demand had broken, saying the change in backdrop was "delaying the recovery a bit, but there's nothing structural or specific that would impair the recovery." LVMH described business activity in China as less "buoyant", while the United States, Europe and Japan still saw "good growth".

Tax pressure

China's new guidelines require wealthy taxpayers with offshore trusts to declare undisclosed assets and settle all unpaid liabilities before a 22 October deadline, Reuters reported. Chinese consumers account for approximately one-fifth of global luxury purchases. A 20% levy on affected wealthy individuals is putting pressure on spending by ultra-high-net-worth consumers, according to Alexis Bonhomme, head of Shanghai-based luxury consultancy Trinity Asia.

The campaign is broader than one tax line. It includes tighter controls on cross-border stock trading and demands that citizens pay billions of dollars in levies on offshore assets and investment gains. Sales at the 25 biggest luxury labels in China fell more than 10% in July, according to three research firms surveyed by Bloomberg, worse than the slowdown in June. Louis Vuitton, Dior, Gucci, Bottega Veneta and Balenciaga all recorded double-digit drops that month, while Hermès swung from gains to declines, Bloomberg reported in August.

China was once the engine of decades of luxury growth before the property downturn and weaker consumer confidence cut into spending. Wealthy Chinese have also shifted money into stocks and other financial assets, making them more sensitive to market swings, said Robert Wu, chief executive of Shanghai research firm Baiguan.

Market reaction

Four sell-side analysts cut their target price on LVMH by an average 9% after the results, Reuters reported. LVMH shares were down 1.5% by 7.30am GMT, with Hermès, Kering and Richemont down by a similar degree. Bloomberg reported the shares were little changed in early Paris trading after declining about 40% this year. JPMorgan analysts told clients they expected further pressure on the sector, citing "confirmation that the Chinese cluster seems to have taken a material (and bigger than feared) step down".

Europe's luxury groups have lost around €330 billion in market value since the start of 2026, with LVMH alone down about 40%. "Everybody's having a tough time," said Jacques Roizen, co-founder of Shanghai-based consultancy Foresight Performance Partners. "LVMH as a portfolio of scale is such an industry index, and the other luxury listed companies are not going to significantly outperform that."

Because LVMH was the first major sector player to report, its miss was read as a signal for rivals. The sector was already three years into a slowdown before these numbers landed. LVMH's results did not separate the tax effect from the wider economic slowdown.