LVMH Fashion Sales Drop 5 Percent in Third Quarter

LVMH posted a 5 percent drop in third-quarter organic sales across its core fashion and leather division. Spending by Chinese shoppers deteriorated sharply.

Total group revenue rose 1 percent on an organic basis to 18.5 billion euros ($20.7 billion). Market analysts had forecast 1.3 percent growth.

Fashion and leather goods generate nearly half of group revenue. The unit’s contraction landed well below consensus estimates of a 1.8 percent decline. Flagship labels Louis Vuitton and Dior took the brunt of the downturn. Regional sales across Asia excluding Japan dropped 5 percent over the quarter.

Chinese Spending Reverses Regionally

Weakness in mainland China offset gains in other markets, including a 5 percent sales increase in the United States. Chinese consumers generate roughly one-fifth of global luxury purchases. That exposure hit regional department store concessions and flagship boutiques as footfall and basket sizes retreated.

Recent regulatory pressure in China, including a tax crackdown on wealthy individuals, dampened appetite for high-ticket discretionary purchases. In mainland retail centers, luxury operators report tighter consumer budgets and reduced conversion rates across apparel and leather goods.

“In the third quarter specifically, Asia was penalised by a sharp macro-led deterioration in Chinese consumer sentiment, with a tangible impact on discretionary expenses.”

Hard Luxury Loses Momentum

Slower demand spread into categories that previously showed resilience during broader retail pullbacks. Organic sales growth in the watches and jewellery unit, which includes Bulgari and Tiffany, slowed to 6 percent in the third quarter after posting 9 percent growth during the first half of the year.

Hard luxury typically attracts shoppers seeking store-of-value assets during economic uncertainty. Slower momentum at Tiffany and Bulgari shows that even affluent shoppers across Greater China are delaying watch and jewellery transactions.

Mall Landlords and Margin Pressure

For high-end landlords across Shanghai, Beijing and Hong Kong, falling sales at anchor fashion tenants threaten revenue-share lease terms. Premium malls lean heavily on Louis Vuitton and Dior flagships to generate customer foot traffic. Softer sales volumes reduce landlord yields on turnover rents.

Rival luxury conglomerates face identical pressure across their regional store networks. European luxury groups have shed roughly 330 billion euros in combined market capitalization this year. Marketing budgets and store renovation schedules across second-tier Asian cities now face immediate scrutiny.

Three Years of Slower Growth

The latest trading update extends a three-year luxury demand deceleration across Asia. Following a brief post-pandemic rebound in travel retail, Chinese outbound tourism shifted toward closer regional destinations where luxury price differentials have narrowed.

LVMH shares fell more than 3 percent in US trading following the update. Investors and retail operators now track whether upcoming fourth-quarter holiday trading and Chinese New Year bookings stabilize inventory levels across luxury flagship networks.