The Commission has yet to determine if the aid conforms to the internal market's requirements.
LVMH, the luxury goods conglomerate, reported disappointing results for the second quarter of 2025, with a 4% decline in revenue year-over-year and a 22% drop in net profit [1][2]. The core fashion and leather goods division, which includes brands like Louis Vuitton and Dior, saw an 8% decline in revenue for the first half, with a 9% decline in Q2 alone [1].
The Asian market, particularly China, was a major factor in LVMH's disappointing second-quarter figures. Sales in Japan fell by 28 percent, indicating that the trend of Chinese customers shopping abroad is also waning [2]. The US-listed stock of LVMH is down around two percent [2].
However, there are signs of a first stabilization in the US market for LVMH, despite stagnant sales overall. Slight increases in the fashion sector were reported by CFO Cécile Cabanis [2].
The challenges faced by LVMH are not unique to the company. The luxury sector has been grappling with geopolitical turmoil, weaker demand especially from Chinese consumers, unfavorable exchange rates, and a broader luxury sector slowdown [1].
Despite these short-term challenges, analysts expect a recovery over the longer term. Morningstar analyst Jelena Sokolova projects a conservative 5% annual sales growth for LVMH over the next decade, underpinned by improving demand from normalized Chinese and U.S. consumption [1].
From an investment perspective, the recent decline in LVMH's stock price reflects macroeconomic and geopolitical challenges impacting luxury spending and consumer sentiment globally. LVMH’s historical outperformance and brand strength support a medium-to-long term recovery scenario if economic conditions stabilize [2].
However, investors should be cautious in the near term as luxury demand remains fragile, and innovation/value perception issues may weigh on growth [2]. A lack of formal guidance for the remainder of 2025 adds uncertainty to short-term outlooks [1].
Fundamental valuation approaches, like discounted cash flow models, may help assess if the current stock pricing sufficiently reflects these risks and opportunities [3].
In summary, the Q2 2025 disappointing results suggest short-term caution given persistent luxury headwinds and profit declines. However, LVMH’s strong brand portfolio and potential recovery in key markets provide a basis for optimistic long-term growth. Investors should weigh macroeconomic risks, monitor demand trends, and consider valuation metrics before making decisions.
A conflict of interest note: The publisher Börsenmedien AG's management and majority shareholder, Mr. Bernd Förtsch, has entered positions in the financial instruments mentioned in the publication or related derivatives, which could benefit from the price development resulting from the publication.
You can access the latest issue 31/2025 of DER AKTIONÄR for more in-depth analysis at https://www.deraktionaer.de/epaper.
References:
- Bloomberg
- Reuters
- Morningstar
The decline in LVMH's net profit and revenue, as well as the drop in sales in the Asian market, particularly China, may impact investment strategies related to finance, as the luxury sector faces geopolitical turmoil and a broader slowdown. On a positive note, analysts expect a recovery for LVMH over the longer term, but investors should be cautious in the near term, considering macroeconomic risks and monitoring demand trends, especially in the sports and fashion sectors.
With a waning trend of Chinese customers shopping abroad and a stagnant US market, the weather is uncertain for LVMH's financial prospects in the short term. However, the potential recovery in key markets and LVMH’s strong brand portfolio provide a basis for optimistic long-term growth, and fundamental valuation approaches may help assess investment decisions.
