LVMH shares drop as fashion and leather goods sales decline by 5% in Q3

LVMH’s fashion and leather goods division recorded a 5% decline in organic sales in the third quarter, exposing the fragility of the luxury market’s recovery as Chinese consumers rein in spending and geopolitical uncertainty weighs on demand.

The French luxury conglomerate reported third-quarter revenue of €18.5 billion (US$20.8 billion), representing 1% organic growth and slightly exceeding analyst expectations of €18.46 billion. However, its largest division, which includes Louis Vuitton, Dior, Celine, Loewe and Fendi, generated €8.25 billion, down from €8.5 billion a year earlier.

A look from the latest Louis Vuitton show for Spring/Summer 2027. (Photo: Reuters)

This 5% contraction was steeper than analysts’ expected decline of 1.8%, reversing the division’s return to growth in the second quarter, when organic sales increased by 1%.

The news affected LVMH’s stocks greatly, as shares fell more than 1% on Tuesday following the statement, extending a difficult year for the group as investors reassessed prospects for a sustained recovery in luxury spending.

Asia, excluding Japan, recorded a 5% decline in sales, while the US market grew 5%. The contrasting performances highlight the importance of Chinese demand to the global luxury industry, which has struggled to regain momentum following a prolonged slowdown.

Louis Vuitton faces additional pressure following a trademark lawsuit with the eminent Chinese tea chain “Molly Tea” that triggered a backlash among Chinese consumers. The controversy has added to the challenges facing the brand as LVMH attempts to revive demand in one of its most important markets.

Molly Tea's logo, as appears on the cup, lost the infringement case to Louis Vuitton this past July. (Photo: Molly Tea)

Geopolitical tensions, particularly in the Middle East, and concerns about inflation have further complicated the outlook for luxury spending across the world this year.

Despite the weakness in fashion, several of LVMH’s businesses continued to grow. Selective retailing, which includes Sephora, recorded 8% organic growth in the third quarter, while watches and jewellery and wines and spirits each increased 6%. Perfumes and cosmetics grew 1%.

The results suggest that demand remains uneven across luxury categories, with jewellery and beauty retail showing greater resilience than designer fashion and leather goods.

Dior Sauvage, one of the house's best-selling fragrances. (Photo: Dior)

For the first nine months of 2026, LVMH generated €57.1 billion in revenue, down 2% in reported terms but up 2% organically. Fashion and leather goods revenue fell 4% on a reported basis to €26.4 billion over the same period.

The division’s performance is particularly significant because it accounts for nearly half of group revenue and a substantial share of operating profit. Its contraction therefore places pressure on LVMH’s broader financial performance, despite growth elsewhere.

The latest results also raise questions about the effectiveness of creative director musical chairs leadership changes and new collections in restoring demand. While refreshed designs may strengthen brand appeal, they have yet to translate into a consistent recovery across the group’s flagship fashion business.

With the luxury sector still searching for durable growth, LVMH’s near-term outlook will depend heavily on whether Chinese consumers regain confidence and whether demand in the US can continue to offset weakness in Asia.