LVMH’s luxury recovery falters as Louis Vuitton and Dior owner hit by China slowdown

Sales in LVMH’s fashion and leather goods business fell 5 per cent in the third quarter of the year, with the luxury group hit by a slowdown in demand in China where early hopes for a turnaround have disappointed.

The decline marks a setback from the previous quarter, when the owner of Louis Vuitton and Dior reported its first period of growth in its bellwether division for two years. Third-quarter organic revenue at the unit fell more than the 1.8 per cent expected by analysts in the three months to September, compared with a year earlier.

Hopes that the luxury industry was emerging from a near four-year downturn have faded over the past couple of months, with conflict in the Middle East, geopolitical turmoil and inflationary pressures weighing on the confidence and spending power of “aspirational” luxury consumers.

LVMH said on Monday (Oct 12) that its fashion and accessories business continued to benefit from the “buoyant US market but was affected in the third quarter by the slowdown in demand in China”.

LVMH’s results kick off what is expected to be a tough reporting season for the luxury industry, with even top-end brands such as Hermès coming under pressure.

Group sales at LVMH rose 1 per cent in the third quarter on an organic basis to €18.5 billion (US$20.67 billion; S$26.47 billion), boosted by strong demand for jewellery and in its selective retailing division, notably beauty retailer Sephora. Analysts expected a 1.3 per cent rise for the group in the quarter. 

“What we’ve been seeing this quarter in terms of macro news and change in backdrop for Chinese consumers is delaying the recovery a bit, but there’s nothing structural or specific that would impair the recovery,” LVMH chief financial officer Cecile Cabanis said. “It’s just going to take a bit more time.”

LVMH’s share price is down nearly 40 per cent this year, with investors questioning where the luxury industry will be able to find growth. At about €190 billion, the market value of the group controlled by the family of chief executive Bernard Arnault has more than halved from its 2023 peak.

Luxury spending in the US this year has helped offset weakness in China, where demand has been weighed down by troubles in the country’s real estate market.

But the American market may also be weakening: credit card data published by Citibank this month showed that spending on luxury goods in the US had fallen at least 4 per cent in each of the last three months. 

Group sales in Asia excluding Japan were down 5 per cent in the quarter from a year earlier, pulled down by China, while growth in US sales slowed slightly from 6 per cent in the second quarter to 5 per cent in the third. 

The ongoing weakness in LVMH’s fashion and leather goods sales puts a spotlight on the performance of luxury’s biggest brand, Louis Vuitton. The designer label suffered a backlash in China this summer after it sued popular tea brand Molly Tea for trademark infringement. 

Louis Vuitton was subsequently criticised for claiming ownership of a four-petal flower design that resembles traditional Chinese motifs. 

“The Molly Tea incident seems to have had a fairly extreme impact on trends at Vuitton in China. Vuitton’s response to the crisis seems to have been that of keeping a low profile from a marketing perspective,” noted James Grzinic at Jefferies. 

Cabanis said that a one-off logistics problem had affected Louis Vuitton, knocking around one point of growth off the quarter. 

LVMH said on Monday that its second-biggest brand Dior was benefiting from “especially strong” demand for new designer Jonathan Anderson’s ready-to-wear fashion and leather goods lines. Cabanis said Dior sales were positive in the year so far. 

Sales at the luxury group’s other divisions grew in the third quarter. Jewellery remains a bright spot for the sector, with sales at LVMH’s watches and jewellery division up 6 per cent on the previous year. Sales at wines and spirits business Moët Hennessy were up 6 per cent in the third quarter.

By Adrienne Klasa © 2026 The Financial Times.

This article originally appeared in The Financial Times.