LVMH’s Q1 sales drop highlights luxury is under pressure

LVMH, the world’s largest luxury conglomerate and a barometer for the broader industry, reported a 5 per cent decline in earnings from its fashion and leather goods division in the first quarter, casting a long shadow over what was expected to be a year of cautious recovery. The French giant’s challenges may well extend into the second quarter, as global trade tensions persist and even the most affluent consumers show signs of restraint.

Despite the fanfare surrounding high-profile collaborations—such as the Louis Vuitton x Murakami revival—and heavy investment in spectacle-driven runway shows, consumer enthusiasm has yet to materialise meaningfully. Particularly in key markets like China and the United States, LVMH failed to convert marketing momentum into sales. Revenues across Asia dropped 11 per cent, with a 3 per cent dip in the U.S., triggering an 8 per cent fall in the group’s share price on Tuesday.

Insiders point to a lack of dynamism at Dior as a possible drag on overall performance. Market speculation around the future of Maria Grazia Chiuri—rumoured to be departing—and the possible appointment of Jonathan Anderson, who recently exited Loewe, has gone unaddressed by the group. The silence from LVMH only deepens the uncertainty amid an already jittery market.

Further compounding the group’s woes, its beauty segment also underperformed. The company cited weakness at Sephora’s U.S. operations as a contributing factor. With tariff risks looming over luxury imports, the spotlight now shifts to whether LVMH will scale up its American manufacturing presence to mitigate trade exposure.

Behind the scenes, executive reshuffling continues, with key creative and strategic roles reportedly in flux. While the group has historically thrived on reinvention, the current climate demands more than aesthetic innovation—it calls for strategic clarity and market responsiveness.

The outlook for luxury remains tepid, particularly in China, where McKinsey estimates that demand contracted between 18 and 20 per cent in 2024. For LVMH, often seen as a proxy for global luxury sentiment, the coming quarters will be critical in determining whether it can regain momentum—or if the market correction is only just beginning.