LVMH: With sales of the fashion and leather goods division in hard, LVMH sees its profit falling 22% in the first half of

(BFM Stock Exchange) – The Luxury number one group recorded a general decrease in its results in the first half, penalized by the atony of demand for luxury products. The fashion and leather goods division suffered particularly, with a drop in its 9% income in comparable data in the second quarter.

The market for several weeks had a difficult publication on the part of LVMH for several weeks under the first half (and the second quarter for its income).

This, because demand for luxury products has been affected by economic uncertainty caused by customs duties, a drop in American spending in Europe (due to a lower dollar in the face of the euro) and Chinese consumers still under pressure. UBS does not wait for a significant recovery of luxury before the second half of 2026.

In this deleterious context, LVMH’s benefit fell to the first half of 5.7 billion euros against 7.3 billion euros a year earlier, a drop of 22%.

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The fashion division and leather goods drops 9% in the second quarter

The sales of the company suffered again in the second quarter. LVMH revenues fell 4% in comparable data after a drop of 2% in the previous quarter. The flagship division of the company, namely fashion and leather goods, particularly weakened, with a fall in its income by 9% after a decrease of 5% in the first quarter.

According to a consensus quoted by Royal Bank of Canada, analysts were tabling on a 4% withdrawal of the company’s income in comparable data, and 7% for the fashion and leather goods division.

The Canadian Bank believes that the fall in income from the “fashion and leather goods” division, “will probably disappoint” investors and “will probably raise questions about the health portfolio of the group in the Soft Luxury ‘(clothing and leather goods, editor’s note)”. Royal Bank of Canada notes, however, that the “spirits wines” and “selective distribution” divisions (Séphora and sales at airports) have exceeded expectations.

“LVMH has announced a difficult new quarter, with an organic withdrawal of 9 % for the fashion and leather goods division, which is of capital importance (against a consensus of financial analysts of -6.4 %). All the other divisions exceed consensual forecasts,” observes Bernstein.

In regions, sales were stable in North America in the quarter in comparable data, fell 6% Asia outside Japan. They fell 28% in Japan and fell 1% in Europe. Sales in Japan have been penalized by the Yen’s rise which makes purchases of luxury products for tourists, especially Chinese, less interesting.

Japan had, throughout the first half of 2024 “, benefited from the abnormal increase in tourist customers expenses because of the sharp drop in yen,” said LVMH in its press release.

Vigilance on the second semester

Throughout the first half, LMVH revenues fell 3% in data comparable to 39.8 billion euros.

On the other side of accounts, LVMH generated a current operating profit of 9 billion euros, compared to 10.65 billion euros a year earlier, down 15%.

“The current operating profit has exceeded the forecasts by 2% or 150 million euros, thanks to what seems to be a control of costs in a context of difficult demand”, appreciates Bernstein on this point.

“We are approaching the second part of the year with great vigilance and I am confident in the tremendous long -term LVMH potential and in the commitment of our teams to further strengthen the group’s advance on the luxury market,” said the group’s CEO, Bernard Arnault, quoted in a press release.

Cited by Reuters, the group’s financial director, Cécile Cabanis said that if the United States and the European Union managed to agree on American customs duties of 15%, as suggested by several articles, this would constitute “a good result” which would be positive for “mood” of customers.

The manager also considered that the current environment was an opportunity for the company to optimize its cost structure.

Cécile Cabanis also said that the group had no reason to think that allegations of abuse to workers from her Italian brand Loro Piana would affect sales.

The LVMH Transalpine House was placed in mid-July under “judicial administration” in Italy, according to AFP, accused of having “negligently facilitated” the exploitation of Chinese workers in subcontractors.

For his part, Bernard Arnault announced in an interview in Le Figaro that the group was going to open a new Louis Vuitton workshop in the United States. “Louis Vuitton already had a workshop in the United States when I arrived at LVMH. Given the development of the house in the United States, we opened a new one five years ago, and we plan to open another to meet demand, still in Texas,” said the manager on a daily basis.

The reaction of the market to all of these announcements will be observed on Friday on the Paris Stock Exchange. In New York, the ADR of LVMH (a certificate of deposit which allows American investors to position themselves on foreign titles) lost 2.6% around 6 p.m.

Julien Marion – © 2025 BFM Bourse