LVMH reported a 5% decline in revenue for its fashion and leather goods sector during the third quarter, bringing the total to €8.24 billion. While the conglomerate's overall sales grew by 1% to reach €18.5 billion, the results highlight a significant cooling of demand in key Asian markets.
The 5% Asia Slump and the Molly Tea Backlash
The luxury giant is feeling the heat in Asia, where sales (excluding Japan) dropped by 5%. According to LVMH CFO Cécile Cabanis, the third quarter was marked by a deteriorating "feel-good" factor among Chinese consumers, compounded by ongoing volatility in the Middle East. This regional downturn suggests that the post-pandemic spending spree in China has hit a wall.
Adding to the macroeconomic pressure was a specific cultural clash . Louis Vuitton faced a social media backlash in China following a legal dispute with the tea brand Molly Tea. After a court ordered Molly Tea to pay Louis Vuitton approximately $1.5 million for infringing on the luxury house's four-petal emblem, the ruling sparked negative sentiment online.. As the report indicates, this controversy had a tangible, albeit difficult-to-quantify, negative impact on the brand's performance at the start of the quarter.
Celine's Double-Digit US Growth and the Soft Triomphe Effect
While some sectors struggled, Celine is emerging as a new powerhouse for LVMH. The brand saw double-digit sales growth in the United States this quarter, driven largely by the popularity of the Soft Triomphe handbag. Cécile Cabanis expressed confidence that Celine is now positioned to become a primary growth driver for the group.
Dior is also finding success in the US market, particularly within women’s ready-to-wear. This growth is being attributed to the vision of Jonathan Anderson, whose designs are seeing strong traction. However, the success is uneven; LVMH noted that while women's apparel is thriving,men’s ready-to-wear is "less advanced" and requires more strategic work to meet expectations.
Loro Piana's Strong Growth Amidst a Flat Dior
The Q3 results reveal a shift in consumer appetite toward "quiet luxury" and high-end accessories. Loro Piana and Rimowa were highlighted as outperformers, continuing to enjoy strong growth even as Dior's overall performance remained "flat." This suggests that ultra-high-net-worth individuals are still spending, but they are pivoting toward stealth wealth and hard luxury goods.
Other brands are in a state of transition. At Fendi, the group is waiting for the newness introduced by Maria Grazia Chiuri to fully integrate into the market, though the Fendi Baguette—updated with a softer material—is already performing well. similarly, Loewe is seeing renewed momentum through its recently launched bag collections.
The October 22 Deadline for Kering and Hermès
Because LVMH is widely viewed as the bellwether for the entire luxury industry, these numbers set a sobering stage for its competitors. All eyes are now on October 22, when Kering and Hermès are scheduled to report their own Q3 earnings. The market is already bracing for a slowdown.
According to HSBC estimates, Kering is expected to post a decrease of 1.6%, while Hermès is projected to see growth of 5.3%. Both figures represent a deceleration compared to the second quarter, confirming a broader industry trend where luxury consumption is normalizing after years of exponential growth.
The Unquantified Cost of Louis Vuitton's Shipping Glitch
Despite the detailed earnings call , several gaps remain in the data. LVMH does not break out exact sales figures by individual brand, meaning the precise scale of the "flat" performance at Dior or the exact dip at Louis Vuitton remains a matter of estimation. This lack of granularity makes it difficult to determine if the slump is a brand-specific failure or a total market shift.
Furthermore, the company admitted that a shipping partner issue weighed on Louis Vuitton's quarterly growth by just over one percentage point. While the report says the issue is now resolved, it remains unclear how such a logistical failure occurred at this scale for a brand of Louis Vuitton's stature, and whether smiilar vulnerabilities exist across other LVMH supply chains.
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