(Jan 28): LVMH had a poor Christmas and indicated 2026 won’t get much better, dampening investors’ hopes of a luxury industry rebound.
LVMH Moët Hennessy Louis Vuitton SE, previously one of the most reliable performers in the sector, posted a worse-than-expected 3% drop in organic sales in the fourth quarter at its main fashion and leather goods unit, which includes Louis Vuitton and Christian Dior.
Three of its five divisions missed estimates in what’s traditionally their strongest period, with a downbeat chief executive officer Bernard Arnault telling investors 2026 is unlikely to be straightforward, and that the group would limit spending this year as a result.
“I think we will make it through the winter,” Arnault said, using gallows humour.
LVMH shares slumped as much as 8.2% in early trading on Wednesday in Paris, the biggest intraday drop since April. The slide pulled down the broader European market. LVMH shares were down about 21% over the past 12 months through Tuesday’s close.
With the results, hopes that the luxury segment is crawling out of its post-pandemic slump have been dashed. With cost-of-living pressures, tariffs and geopolitical uncertainty weighing on spending, companies in the sector are struggling to bounce back. Brands have also suffered from a consumer backlash after steep price increases.
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“The journey back to growth for the sector, and LVMH as its proxy, will remain bumpy in the coming quarters, highly dependent on the external backdrop,” JPMorgan analyst Chiara Battistini said in a note.
Some companies have been more resilient, such as Cartier owner Richemont. In uncertain times, consumers see gold necklaces, bracelets and the like as better stores of value than trendy handbags.
Though LVMH has a smaller presence in watches and jewellery, that business performed better than expected in the latest quarter, helping the company eke out a slight gain in overall sales despite weakness in fashion and leather goods. Bulgari performed particularly strongly during the fourth quarter, LVMH said.
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That was an outlier for the group, which otherwise did not enjoy a festive rebound, AIR Capital analyst Pierre-Olivier Essig told Bloomberg. The cautious management tone likely indicates a year of transition, he said.
Organic sales rose 1% in the fourth quarter in both the US and the region that includes China, ahead of analyst estimates. Drops of 2% in Europe and 5% in Japan were bigger than expected.
Full-year profit from recurring operations was EUR17.8 billion (US$21.3 billion or $26.9 billion), LVMH said, a drop of 9.3% from a year earlier but better than analysts expected.
LVMH’s wines and spirits division saw its third year of falling sales. It’s weighed down in particular by a collapse in demand for Hennessy Cognac.
Separately, LVMH paid EUR1 billion to increase its stake in Loro Piana — the brand known for its cashmere sweaters — to 94% from 85% in the second half of last year, according to a company representative.
Arnault, the billionaire founder of LVMH, said his family’s stake in the luxury conglomerate would surpass 50% in 2026.
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