LVMH sales fall as luxury trends shift amid inflation

LVMH, the luxury conglomerate, experienced a sales decline of 3% in Q2 2025 as inflation impacts various sectors. Reported sales for the quarter reached $22.95 billion, aligning with analyst expectations, despite forecasts estimating a steeper 7.02% drop. This moderation in decline points to a somewhat resilient performance in the luxury market, particularly in the U.S., where selective retailing strategies have helped stabilize sales. Nevertheless, analysts predict a cautious outlook, with no significant recovery expected in the luxury sector until late 2026. The wine and spirits division, alongside the fashion and leather goods sector, reported a 7% revenue decline. Various factors contributed to this downturn, including rising inflation and a sluggish Japanese tourist economy, affecting demand for high-end fashion items. Despite these challenges, LVMH's revenues were buoyed by its investment in U.S. manufacturing, highlighted by plans to open another factory in Texas. This factory follows President Donald Trump’s administration tariffs, reflecting LVMH's strategic response to external economic pressures. Currently, LVMH holds nearly a quarter of the global luxury market share, showcasing its dominance despite recent shifts in consumer confidence attributed to economic uncertainties. The Moët Hennessy division, in particular, has struggled, with a significant 36% drop in operational profits and a 9% decrease in sales revenues. In response, LVMH has made recent leadership changes intended to attract younger demographics within this division, showing their commitment to adapting in a challenging market environment. Despite the setbacks, LVMH continues to adjust its strategies to navigate the evolving luxury market landscape, with industry experts emphasizing the importance of addressing inflation and shifting consumer preferences. Cécile Cabanis, LVMH's CFO, has been vocal about the ongoing restructuring within the wine and spirits sector and the anticipated slow growth until the latter half of 2026, alongside the challenges faced by the fashion and leather goods divisions stemming from external economic influences.