LVMH’s Fashion Engine Returns to Growth, but the Luxury Recovery Remains Uneven

Fashion and Leather Goods is LVMH’s most important business because it includes Louis Vuitton, Christian Dior, Celine, Loewe, Fendi and Loro Piana and generates the majority of the group’s operating profit. Its 1 per cent organic expansion in the second quarter was therefore an important change from the 2 per cent contraction recorded in the first quarter. For the full first half, the division generated €18.15 billion in revenue, down 5 per cent on a reported basis and 1 per cent organically. Profit from recurring operations declined 7 per cent to €6.20 billion. These figures show that one quarter of modest sales growth has not yet repaired the financial impact of the prolonged luxury slowdown, but the improvement indicates that LVMH’s largest brands are beginning to regain momentum after two years of weaker demand.

Christian Dior was a major contributor to the recovery. The first products designed by creative director Jonathan Anderson were well received, particularly in leather goods and women’s ready-to-wear, helping Dior perform slightly better than the overall division. Sales to American and Japanese customers recorded double-digit growth during the quarter. Louis Vuitton also returned to positive growth, supported by product development around its Monogram heritage and strong performances from major new stores in Beijing and Seoul. Loro Piana and Rimowa continued to outperform, while LVMH reported gradual improvement at Celine and Fendi. This creative renewal is strategically important because luxury brands cannot rely indefinitely on price increases; they must continually generate desirability through new products, cultural relevance and distinctive retail experiences.

The United States became the clearest geographical growth engine. LVMH’s US organic sales increased 6 per cent in the second quarter, accelerating from 3 per cent in the first. The company attributed the strength partly to wealth generated by rising technology and AI-related assets, which supported spending among affluent customers. Asia excluding Japan grew 4 per cent, confirming a gradual improvement in Chinese and other Asian markets, while Japan advanced 14 per cent. Europe was flat as weaker international tourism offset resilient local demand. The conflict in the Middle East reduced group growth by approximately one percentage point by weakening spending in the Gulf and disrupting travel flows into European luxury destinations.

Performance across LVMH’s other divisions revealed an increasingly divided luxury market. Watches and Jewellery achieved 11 per cent organic growth in the second quarter, led by strong demand for Tiffany and Bvlgari, while Selective Retailing grew 6 per cent as Sephora continued gaining market share. Wines and Spirits increased 5 per cent, supported by improving champagne demand and stronger Hennessy momentum in China. In contrast, Perfumes and Cosmetics declined 1 per cent. The strong performance of jewellery relative to fashion suggests that wealthy customers are favouring products perceived as enduring, collectible or linked to precious materials, while aspirational consumers remain more cautious about expensive handbags and clothing.

At group level, second-quarter organic revenue rose 3 per cent to €19.52 billion, bringing first-half revenue to €38.64 billion. Organic growth for the six months was 2 per cent, but reported revenue declined 3 per cent because of exchange-rate and portfolio effects. Profit from recurring operations fell 4 per cent to €8.69 billion, with adverse currency movements reducing earnings by approximately €700 million. Nevertheless, the operating margin remained high at 22.5 per cent, net profit was stable at €5.70 billion and free cash flow increased to €4.10 billion. These results demonstrate LVMH’s financial resilience, but the group still faces demanding comparisons in the second half, geopolitical uncertainty and a luxury consumer base that is recovering at different speeds. The 1 per cent fashion rebound is therefore a credible early sign of stabilisation, not yet confirmation of a broad and sustained luxury-market recovery.