LVMH’s luxury crown slips

What happened LVMH’s recent drop from Europe’s top five most valuable publicly listed companies — overtaken by Swiss food and beverage conglomerate Nestlé — marks more than a symbolic blow to the French luxury juggernaut. Earlier this month, LVMH’s market capitalization tumbled 25% to 239 billion euros (approximately $271 billion), its sharpest share price drop since the 2008 financial crisis. While global macroeconomic pressures, including the looming threat of new U.S. tariffs, weigh heavily on the sector, the Asia-Pacific region, once hailed as luxury’s strongest growth engine, has now become one of LVMH’s weakest spots. Fashion and leather goods take a hit Despite the group’s broad portfolio, which spans champagne, watches, and perfumes, it is the fashion and leather goods division (home to Louis Vuitton, Dior, Fendi and Celine) that has historically underpinned LVMH’s meteoric rise. But that engine is now stalling. Sales in this category dropped 5% in Q1 2025, yet another signal that the luxury high tide has pulled back. While LVMH’s total turnover for 2024 came in at 84.7 billion euros (approx $95.9 billion), down 1% year-on-year, it’s the regional breakdown that tells the fuller story: Asia (excluding Japan) slumped 10%, while Japan posted an 8% gain and the U.S. eked out 3% growth. The Jing Take The behemoth’s diverging performance highlights a deepening consumer sentiment gap in Asia, particularly in mainland China, where demand for high-ticket items remains soft amid economic uncertainty and growing price sensitivity. Although LVMH is still outperforming in Japan, aided by a weak yen that continues to attract Chinese tourists, a rebound in Greater China has yet to materialize in any meaningful way. Meanwhile, parallel import platforms like Dewu are reshaping luxury consumption habits across the mainland, offering authenticated products at steep discounts that erode both official channel sales and brand equity — a trend that has had an impact on Chanel, for example, this year. Investor confidence falters as rivals outperform Earlier this month, Barclays downgraded LVMH to “equal weight,” with the bank’s analyst Carole Madjo noting that a rebound in the group’s core fashion and leather goods division is unlikely in 2025. The new rating reflects a broader dip in short-term investor confidence across the luxury sector, even as long-term sentiment toward the French powerhouse remains resilient. Only one of nearly 40 analysts surveyed by Bloomberg currently recommends selling LVMH stock. However, rivals like Hermès — now trading at more than 2.5 times LVMH’s valuation multiples – have proven more robust in navigating Asia’s shifting dynamics, emphasizing a widening gulf in how luxury brands are adapting to a new consumption reality. As APAC recalibrates and U.S. tariffs loom, LVMH’s position atop the luxury pyramid is no longer unquestioned. Its next moves in China, South Korea and Southeast Asia — both in terms of pricing strategy and consumer re-engagement — will be critical in restoring investor faith and consumer desire in the region that once defined its dominance. The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

LVMH’s luxury crown slips

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Published May 27, 2025

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LVMH’s luxury crown slips