LVHM Shares Tank by 8 Percent

Editor’s note: This story is part of a new series about the fusion of art and luxury. See all our reports on this topic here.

LVMH Moët Hennessy Louis Vuitton’s troubling quarter sent another jolt through the luxury world, further demonstrating how fragile recovery talk remains for an industry still grappling with geopolitical pressures, wary consumers and compressed profit margins.

Shares in the French conglomerate fell about 7% on Wednesday after reporting fourth-quarter results as investors reported lower-than-expected profit margins and a decidedly constrained view of the outlook from top executives. The decline rippled across the industry, causing shares in Gucci parent company Kering, Moncler and Hermès to fall between 2% and 5%. It serves as a reminder of LVMH’s position as a global leader in luxury, fashion and the broader cultural economy the group helps shape.

LVMH reported organic sales rose 1% in the quarter to 22.7 billion euros, continuing the previous quarter’s modest momentum. But the numbers fell short of higher expectations, especially after rivals such as Richemont and Burberry recently issued more upbeat comments about China. While LVMH said sales in China did rise during the quarter, analysts said the rebound was unimpressive, especially given that new demand in the region could lead to a broader upturn.

At a news conference after the results were announced, Chairman and Chief Executive Bernard Arnault struck a cautious tone. Geopolitical crises, economic uncertainty and unstable government policies make it difficult to predict with confidence the year ahead, he said. Arnault also confirmed that the group will continue to tightly manage costs in 2025, suggesting that the priority remains preservation rather than expansion.

The pressure was most evident in LVMH’s fashion and leather goods division, home to Louis Vuitton and Dior and the engine of more than half of the group’s profits, where operating profit fell 13%. Sales of fashion and handbags fell 3% in the fourth quarter, disappointing analysts who had hoped the category would lead a recovery. A combination of U.S. tariffs, a weak dollar and slowing demand has hit margins across the group, complicating efforts to revive growth without further price increases.

The picture in other sectors is mixed. Watches and jewelry, including Tiffany & Co., stood out as a rare bright spot, with organic sales rising 8% in the quarter. But the wine and spirits business, which contributes a relatively small contribution to overall revenue, has seen a sharp drop in operating income, hit by falling sales of cognac in China and the United States, raising new concerns.

Chief Financial Officer Cécile Cabanis acknowledged that further sales growth will be needed to restore margins and stressed a dual focus on reviving demand while maintaining cost controls. “We need growth,” she said, “and we’re going to focus on getting that growth back and continuing to manage our costs.”

It remains to be seen what impact the plunge in LVHM’s share price will have on the auction house’s growing push into the luxury goods market. Sotheby’s consolidated luxury goods sales will exceed US$2 billion in 2024, accounting for approximately one-third of the company’s total sales of US$6 billion that year. This result is three times the total luxury goods volume in 2019 and remains the highest figure in the industry. As for Christie’s, its sales of handbags, jewelry and watches were $468 million in 2024, accounting for about 22% of the company’s total sales of $2.1 billion. This figure represents a 6% increase from the previous year.