China drives Q1 shifts for Hermès, LVMH and Moncler

For more China-focused finance coverage, subscribe to the Jing Finance newsletter for the latest news, business updates, global analysis, and trends shaping financial markets. As U.S. President Donald Trump and Chinese President Xi Jinping escalate their trade war — which may soon impact the luxury sector — this week’s first quarter results are already raising concerns, even before any new tariffs have landed. LVMH emerged as the biggest casualty. The French luxury conglomerate, whose brands include Louis Vuitton, Christian Dior, and Bulgari, saw sales slide by 3%* to €20.3 billion ($23 billion), with none of its divisions reporting growth. The biggest of the four, fashion and leather goods, fell 5% to €10.11 billion ($11.4 billion). Only the wine and spirits division fared worse, sliding 9% after an already terrible 2024, when it plunged 11%. Cognac and spirits dropped 17%, with Hennessy particularly affected by the weak sell-out in China. Meanwhile, uncertainty over tariffs encouraged extra sell-in to ensure good stock levels in warehouses. Regionally, it was Asia (excluding Japan) that took the biggest hit in Q1, down 11%, largely due to weakening demand from China. Japan also dipped slightly, falling 1%. Cécile Cabanis, LVMH’s new chief financial officer, told analysts in the Q1 2025 earnings call: “The main swing factor is linked to Chinese demand last year in Japan. That 32% increase in Q1 2024 [means] we are not seeing growth this year.” It wasn’t all downbeat. On Wednesday, Italy’s Moncler Group posted that Q1 revenue was up by 1%, reaching €829 million ($942 million). The Moncler brand led the charge with 2% growth, generating almost 90% of total sales at €722 million ($821 million), driven by a 4% increase in its direct-to-consumer (DTC) channel. Meanwhile, Stone Island, acquired in 2020, declined by 5% to €107.3 million ($122 million). Moncler retains pulling power in China Asia is critical for Moncler’s luxury puffer jackets and apparel, accounting for more than half of its global sales. The region also performed the best, rising 6% to €381 million ($433 million), with mainland China continuing to register positive growth. This, said the brand, was “despite a very demanding comparable base and the ongoing shift of Chinese consumption abroad.” Tourist spending in Japan was also a driver, while the Korean market showed signs of softening. Moncler’s CEO Remo Ruffini remains focused on a “brand-first” strategy. He commented: “This approach enabled us to achieve solid growth in the DTC channel across both [our] brands in the first quarter, despite an exceptionally high comparable base. The recent Moncler Grenoble experience in Courchevel was a perfect expression of this: a unique event that took Moncler to new heights, both in product elevation and in strengthening authentic relationships with our communities.” But Ruffini also warned that the months ahead would not be easy without a clear plan. “The year has just begun, and while the macroeconomic picture remains highly unstable, our commitment to combine creativity and innovation with operational flexibility and financial rigor will continue to define our path ahead,” he said. Leather goods drive growth for Hermès The standout performer this week was family-controlled Hermès, which on Thursday revealed solid first-quarter growth of 7%, lifting revenue to €4.1 billion ($4.7 billion). Unlike its French compatriot LVMH, five of Hermès’ seven divisions saw growth, with its biggest — leather goods and saddlery — jumping by 10% to €1.8 billion ($2.1 billion). This category includes women’s and men’s bags, travel items, small leather goods and accessories, with strong demand reported for the new Médor and Mousqueton bags. This division alone accounted for 44% of Hermès revenue in Q1. When combined with ready-to-wear and accessories — including belts, costume jewelry, gloves, hats and shoes — that share climbs up to 72%. Ready-to-wear itself grew by 7.2%, another strong performer. To meet growing demand and reinforce its French credentials, Hermès is increasing its production capacity by adding to its network of ‘centers of expertise’ across the country — a move viewed positively by Chinese consumers. The brand’s L’Isle d’Espagnac leather goods workshop is set to open in Charente later this year, with additional sites planned in Loupes in Gironde and Charleville-Mézières in Ardennes, scheduled for 2026 and 2027, respectively. Hermès’ high revenue growth compared to its competitors came despite weakness in Asia (excluding Japan), by far its biggest market by revenue, where growth was only up by 1%. Though this was against a particularly high comparison base, the luxury house admitted that there had been a downturn in traffic in Greater China since the end of Q1 2024. On the plus side, some of those shoppers turned to Japan, where sales soared by 17.2%. Like Ruffini, Hermès executive chairman Axel Dumas remains bullish despite global market conditions. “In a complex geopolitical and economic context, Hermès is strengthening its fundamentals more than ever: uncompromising quality, creativity at the heart of all development, and vertical integration, a guarantee of preserving unique savoir-faire,” he said. However, it could still be a rough ride from a financial valuation standpoint. Several luxury stocks, particularly LVMH and Kering, have been hit badly this year, as investors remain cautious amid uncertain trading conditions. Year to date, Moncler’s stock is up 5.3%, while Hermès is down 1.5% and LVMH has dropped 23.6%. With an unpredictable 2025 ahead for luxury, mainly due to tariff concerns, these stocks could fall further. McKinsey senior partner in Milan, Gemma D’Auria, said in a podcast on April 11: “It’s going to be a very challenging year. In Europe, we expect fairly sluggish growth, and consumer confidence is quite low. In China, it is extremely low.” *All percentage growth figures at constant currency.

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China drives Q1 shifts for Hermès, LVMH and Moncler