LVMH finds a pulse in post-peak China

LVMH on Tuesday reported another quarter of a gradual return to growth in Asia, as the world’s leading luxury group looks to turn declining sales of its luxury beverage and fashion segments in the region. The owner of Dior and Louis Vuitton said sales in Asia excluding Japan, a region driven largely by mainland China, rose 1% during the final quarter of 2025, down from a 2% gain in the prior third quarter. China’s sales performance in the second half of the year remained largely stable, with overseas spending improving over the last three months. The French company’s fashion and leather goods segment in China reported mid-single digit declines in the fourth quarter, in line with a 3% decline in the firm’s global fashion and leathergoods segment; a figure on par with analysts’ expectations for the all-important holiday period. “Taken as a whole, this seems to point to a positive sequential trajectory for spending by Chinese nationals,” said Bernstein analyst, Luca Solca. Annual sales in Asia excluding Japan fell 4%, despite a “noticeable improvement in trends with respect to 2024, with a return to growth in the second half of the year,” according to the Paris-based company. Globally, quarterly sales at LVMH came in at 22.7 billion euros, up 1% on an organic basis, beating analysts’ expectations of a 0.3% sales decline. The group’s global wine and spirits category suffered a 9% organic sales decline, with the Hennessy owner attributing weak local demand in China for cognac amid ongoing trade tensions in the U.S. and China. Meanwhile, a 1% dip in perfume and cosmetics sales for the fourth quarter was more than offset by an 8% uptick in its watch and jewellery category and 7% organic growth in selective retailing, held up by growth at beauty retailer, Sephora. Despite global sales at LVMH inching forward 1% in the second half, annual sales at the luxury industry bellwether fell 1% to 80.8 billion euros in 2025. Profit from recurring operations came to 17.8 billion euros, with an operating margin of 22%. “LVMH appears to be delivering evidence to suggest its key fashion and leather goods division is stabilising after two years of decline, with other parts of the business, excluding wines and spirits, also showing improving momentum,” says RBC Europe analyst, Piral Dadhania. “Louis Vuitton and Dior have upped the ante and one could hardly ask for more, in terms of creativity, retail execution, events,” says Solca, following the luxury behemoth’s opening a large ship-shaped Louis Vuitton store in Shanghai and a new Dior flagship store in Beijing. Emotional connection LVMH’s new retail activities in Asia are part of a recent strategy to offer Chinese customers “extraordinary stores and cultural experiences,” according to LVMH CEO Bernard Arnault in a statement on Tuesday. The openings also highlight an industry-wide shift in how luxury brands are looking to connect emotionally with shoppers post-Covid. “After the shopping spree era, experiences and emotions have become the true engine of luxury growth,” said Claudia D’Arpizio, Bain & Company senior partner and leader of the firm’s global Fashion & Luxury practice, in a recent report, which predicts luxury sales growth of 4% to 6% annually over the next decade. “Ahead lies a phase of quality-driven growth, fueled by discipline, ethics and innovation. Expansion will favor fewer, higher-impact locations — a shift toward a more discerning, experience-led model.” A changing of the design guard LVMH is pinning its hopes on fashion it-boy Jonathan Anderson —– and his successful reinvention expansion of the LVMH-owned Spanish label Loewe —– to do the same at big sister fashion house, Christian Dior. The company confirmed the Northern Irishman’s appointment last year as creative director of Dior’s men’s, women’s, and couture collections, with Anderson’s first collection hitting stores in recent weeks. Analysts agree that creative director changes act as a catalyst for brands to drive newness and innovation, and shift the fashion cycle away from quiet luxury and towards more maximalist designs. “We view LVMH as a balanced way to play this theme, given the outsized potential for the Christian Dior brand under the new creative direction of Jonathan Anderson for whom initial feedback is positive,” said Dadhania, in an RBC Europe analyst note on Tuesday. Turn up the volume The LVMH earnings update comes just days after Burberry reported a 6% surge in quarterly sales in Greater China, fueled by Gen-Z demand for its British heritage styles, and Brunello Cucinelli posted an 11.5% annual sales increase, driven by U.S. and Asian appetite for quiet luxury —– a segment LVMH is also leaning into as it enters the new year as it increases its majority stake in Italian quiet-luxury brand Loro Piana. LVMH said on Tuesday it has raised its stake in the cashmere maker to 94% from 85%, spending 1 billion euros to acquire the additional shares. Last year, Loro Piana was placed under a year-long court supervision following allegations it was linked to an underground labor force, employed by third parties, who make luxury clothing for renowned Italian fashion houses including Dior and Valentino. “Loro Piana continues to surge ahead. We have just one problem: we need to reign in growth; we need to ensure product quality is maintained as soon as things get a little carried away,”" said Arnault to investors.

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LVMH finds a pulse in post-peak China