LVMH: Why, despite a 9% dive of sales in its flagship division, the scholarship welcomes LVMH’s decline results

(BFM Stock Exchange) – The luxury group is climbing on the Paris Stock Exchange this Friday after having published a 9% drop in comparable data from sales of its fashion and leather goods division, the most important of the company. In addition, But the publication detects some good points, including better profitability than expected.

On paper, the half -yearly LVMH results are not sparkling. Similarly, Thursday evening. Similarly, the group owner of the Louis Vuitton, Céline and Dior brands reported a fall of 4% of its sales in data comparable in the second quarter, which marks a degradation compared to the first three months of the year (-3%). Consequently, Throughout the first half, the current operating profit dropped by 15%, the net profit of 22%.

The big black point of the publication remains above all lvmh: why, despite 9% dive the performance of the “fashion. Moreover, leather goods” division of the company, which represents almost half of its sales and more of two-thirds of its current operating profit. However, In the second quarter. Similarly, this division accused a 9% drop in comparable data, when consensus (the average forecast of analysts) tapped on a decline of 6.4%, according to Bernstein. Meanwhile, In the first quarter of 2025, fashion and leather goods had seen its income falling back by 5% in comparable data.

In a note written Thursday evening. However, Royal Bank of Canada believes that the deterioration of the performance of this division “will probably disappoint” investors.

Not really. Nevertheless, Admittedly, the LVMH action was down this Friday, July 25, in reaction to this publication. For example, But the withdrawal was limited to just over 1%. In addition, And the title quickly turned upwards. Moreover, Around 2:20 p.m., the LVMH action lvmh: why, despite 9% dive took 2.5%.

In its wake, Hermès and Kering, take 1.2% and 3.7% respectively.

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An improvement observed in China – Lvmh: why, despite 9% dive

Several elements deserve to be nuanced. Similarly, To return to the performance of the fashion and leather goods division, it has certainly degraded. But the financial director. Cécile Cabanis, explained that the domestic markets in Europe and the United States had shown resilience.

Americans’ expenses in Europe have sagged a bit due to the fall of the dollar to the euro. which makes luxury products for them on the old continent less interesting. This last phenomenon was able to provoke a phenomenon of “repatriation” of luxury expenditure on American soil. Moreover. global sales of LVMH in the United States improved in the second quarter (0% in comparable data after -3% in the first).

The “big” lvmh: why, despite 9% dive of the deterioration of fashion activity. leather goods actually comes from Asia, and more specifically from the expenditure of tourists in Japan. On the first part of 2024. the weakness of the Yen had prompted Asian travelers to move in the Japanese archipelago to buy luxury goods, especially in leather goods. With the ascent of the yen “we observe a reversal of what had happened last year (in Japan. editor’s note), which is particularly true for Chinese customers”, detailed Cécile Cabanis.

This explains both the tumble of overall sales in Japan in LVMH (-28% in data comparable to the second quarter after -1% in the first). the improvement of trend in Asia outside Japan (-6% after -11%).

“Chinese demand has improved (…). supported by repatriation (purchases of luxury products to Chinese soil, editor’s note) and the success of brand activations such as the ‘The Louis’ in Shanghai,” said Jie Zhang, lvmh: why, despite 9% dive analyst at the independent AlphaValue design office.

The fact that most of the weakness of sales is due to tourism at half mast is a reason. for hope for Deutsche Bank.

“The official line is that the problems at LVMH are due to a low macroeconomic situation. the absence of tourists. But the Chinese did not go to Japan to buy luxury products because they wanted to see Mount Fuji. It was rather because the prices were lower. If it is not a demonstration of the elasticity of the prices, what is it?” Solca, from Bernstein.

Lvmh: why. despite 9% dive

An “impressive costs” control

Beyond the sales of the fashion and leather goods division, the rest of the LVMH results include several encouraging elements. “With the exception of fashion. leather goods turnover, almost everything else seems better than expected, these results are certainly not excellent, but they are not catastrophic lvmh: why, despite 9% dive either,” summarizes Luca Solca.

“LVMH has published slightly better than expected results in the first half of 2025. with a turnover generally in accordance with forecasts and a current operating profit higher than market expectations,” said Jie Zhang.

The analyst notes that. apart from fashion and leather goods, all other divisions of society (wines and spirits, jewelry and watchmaking, selective distribution, perfumes and cosmetics) showed improvement of their activity in the second quarter compared to the first. For example. the “selective distribution” division, which notably brings together Séphora and the DFS distribution company, posted 4% growth in comparable data against a decline of 1% in the first quarter.

On the profitability side, the current operating profit has certainly dropped. But by establishing itself at 9 billion euros in the first half for a margin of 22.6%, this account line significantly exceeded the expectations of consensus, housed at 8.87 billion lvmh: why, despite 9% dive euros for a rate of 22.2%. Luca Solca notes that the company has shown control of its costs in the face of “a difficult environment. on demand”.

“The relative good resistance of margins in most divisions highlights the efforts undertaken on costs”, abounds Oddo BHF. UBS goes so far as to evoke “an impressive cost control”.

During the conference call with analysts. Cécile Cabanis said that the current operating margin of the fashion and leather goods division was maintained at a high level in the first half, at 34.7% “which is very good in view of the deceleration of sales”.

The financial director also indicated that the current period was conducive for the company to be “more structurally. effective” without doing “cost-wrinkles” which would not be sustainable. Cécile Cabanis spoke of “different conversations” with reflections on store costs per square meter. articulation with agencies during events or relations lvmh: why, despite 9% dive with suppliers. However, these initiatives “take time”, she warned, however.

“Hoping lights”

Ultimately, Deutsche Bank sees “glimmer of hope”, anticipating an improvement in sales from the third quarter.

“Investors were waiting for an opportunity to return to this title. the conference calls on a certain number of factors likely to encourage them, including a ‘tangible’ resumption in China, market share gains for key brands and a potential for structural efficiency, as well as rigorous cost management,” said the German bank.

Oddo BHF notes that an improvement in the comparison base in China should be observed in the next quarters. that “it is allowed to think that costs on costs will continue”.

“These elements suggest that a low perception point now seems to be in sight. we keep confidence in the capacity of the group’s brands in ‘Soft Luxury’ (clothing and leather goods, editor’s note) to find a lvmh: why, despite 9% dive commercial momentum”, judges the broker who confirms his recommendation to “Superformance”. “We will still have to be patient in view of a sector context which does not seem to us having to become quickly favorable. ” he nuance.

“The results of the first semester show a rapid implementation of efficiency measures. suggest a glimmer of hope regarding the end of the decline of sales,” judges HSBC.

“We are encouraged by the solid protection of margins. even if we think that a significant recovery of sales will not occur before 2026,” added the Sino-British bank. HSBC remains to “keep” on the title because the establishment is waiting for a recovery only moderate in the second part of the year. with global revenues stable in the third quarter and slightly increase in the fourth.

Julien Marion – © 2025 BFM Bourse