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The latest financial update from LVMH has sent shockwaves through the luxury goods market, demonstrating unexpected challenges for one of the world’s leading luxury conglomerates. On Tuesday morning, LVMH shares fell by as much as 8%, leading to a temporary shift in market capitalizations that saw rival Hermès briefly surpass LVMH as the largest luxury firm.
In a trading report issued following Monday’s market close, LVMH disclosed a 3% decline in year-on-year sales for the first quarter, which came as a surprise to analysts who had anticipated modest growth. This downturn in sales hit not only LVMH but also affected other companies in the luxury sector. Early trading reflected this trend, with Kering shares falling by 2.5%, Burberry decreasing by 4.4%, and Richemont dropping 1.6%.
Hermès, notable for its Birkin bags, saw a smaller decline of 0.7%, allowing it to take the lead over LVMH momentarily. As of 9:30 a.m. London time, LVMH’s market cap was reported at approximately 247.1 billion euros ($280.6 billion), compared to Hermès’ 244.53 billion euros, according to data calculated by CNBC and LSEG.
For a significant period beginning in 2021, LVMH had held the title of Europe’s most valuable company. The luxury market, buoyed by expectations of a resurgence following the COVID-19 pandemic, had faced a new challenge last year when the Danish pharmaceutical firm Novo Nordisk surpassed LVMH, until SAP, a German software giant, took the lead in March 2025.
Analysis of First-quarter Sales
The LVMH division most affected was wines and spirits, experiencing a revenue drop of 9%. The company cited weakening market demand in major regions such as the U.S. and China for cognac, a segment prone to geopolitical fluctuations. In contrast, the key fashion and leather goods division, which represented a substantial 78% of profits in 2024, saw a 5% decrease in sales, while watch sales remained stagnant during this period.
Among geographical divides, Europe was the brightest spot, with a 2% growth recorded organically. However, the Asia-Pacific region, excluding Japan, suffered a significant 11% drop, alongside a 3% decline in U.S. sales and a slight dip of 1% in Japan.
Citi analysts noted in a report that the latest figures offered little optimism for LVMH as the results fell short of even the most cautious expectations. They cautioned that a rebound in revenue could be elusive in the near term as global economic uncertainties continue.
Adding to these worries, Jefferies analysts have lowered their price target for LVMH shares from 670 euros to 510 euros ($578.62), indicating a reserved outlook for the brand amid ongoing economic challenges.
Effects of Tariffs on Luxury Brands
LVMH, which boasts prestigious brands such as Louis Vuitton, Moët & Chandon, and Hennessy, is also navigating the complex landscape of trade tariffs initiated by U.S. policies. As the first European luxury brand to share its quarterly results amidst these tariffs—first announced and then postponed—investors are closely monitoring how these changes could affect both input costs and consumer demand moving forward.
During a conference call, Chief Financial Officer Cecile Cabanis advised that there had not been a significant shift in trends during the first quarter, as overall growth had remained stable over the past six months. She acknowledged that uncertainties in the economy may make aspirational consumers more vulnerable, particularly impacting sectors like wines, spirits, and beauty products.
While Cabanis refrained from confirming direct pricing strategies for the second quarter, she indicated that the company might consider adjusting prices to alleviate inflation impacts or currency fluctuations. Luxury brands are often perceived as more resilient to tariff effects, given their ability to pass on costs to affluent consumers. However, concerns persist that potential tariffs could dampen demand significantly in critical markets such as the U.S. and China, prolonging the luxury sector’s recovery from recent challenges.
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