Updated 3:42 p.m. ET April 13
Has China, a continual bugbear for Europe’s luxury players, finally rounded the corner?
On Monday, LVMH Moët Hennessy Louis Vuitton reported first-quarter organic revenues grew 7 percent in Asia, excluding Japan. That represented its best performance in the region since 2023.
A return to growth in the U.S., up 3 percent in the first three months of the year, and consumer appetite for newness in products and stores also gave the French luxury giant something to crow about.
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Overall, LVMH’s first-quarter revenues decreased 5.9 percent in reported terms to 19.12 billion euros as the conflict in the Middle East capsized a “positive start to the year” in that luxury-loving region, which accounts for roughly 6 percent of its business.
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The overall numbers reflect a 7 percent negative impact because of exchange rate fluctuations, while the Mideast conflict had a negative 1 percent impact on organic growth.
During a conference call with analysts, chief financial officer Cécile Cabanis clarified that store sales in the Middle East plunged between 30 and 70 percent amid the missile and drone exchanges.
“So overall, if you consider a 50 percent deterioration, then you can have the overall impact, which would be, indeed, three points in March and one point for the quarter,” she said, noting retail sales in Saudi Arabia have been more resilient than in the UAE.
In organic terms, the French luxury giant recorded overall organic growth of 1 percent and sequential improvement in its linchpin fashion and leather goods division, which saw organic revenues dip 2 percent.
All business divisions recorded single-digit revenue declines, though in organic terms, watches and jewelry gained 7 percent; wines and spirits, 5 percent, and selective retailing, 4 percent. Perfumes and cosmetics were flat.
The results were broadly in line with consensus expectations, though investors and equity analysts were not yet popping corks.
Shares of the luxury giant slipped 0.3 percent to 481.75 euros in Paris.
“Party postponed” was how Bernstein’s Luca Solca reacted to the numbers — better than the end of 2025 but “likely not enough to convince investors to step off the fence.”
Over at Barclays, analyst Carole Madjo lamented “no good surprise” in fashion and leather goods, while applauding a “solid beat” in watches and jewelry, and also for wines and spirits.
And Thomas Chauvet, an analyst at Citi, wrote in a research note: “In a sector still out of favor, we maintain a positive stance on LVMH” and cited a “path emerging toward a return to growth and margin expansion in Fashion & Leather. Increased brand investment, disciplined cost control, and strengthened leadership teams could help buffer cyclical pressures.”
Releasing its first-quarter tallies after the close of trading on the Paris Bourse Monday, LVMH said it “maintained its powerful innovation momentum and showed good resilience in a geopolitical and economic environment that remained disrupted.
“LVMH remains vigilant yet confident at the start of the year,” it added, noting that “the United States experienced a good start to the year.”
The group also touted resilient local demand, which helped to partly offset lower tourist spending in Europe and Japan, which each registered a 3 percent organic revenue decline.
LVMH blamed the Middle East conflict for the dip in its fashion and leather goods business group, despite the “excellent performance” of Louis Vuitton’s new flagships in Beijing and Seoul, and the first Christian Dior products by new creative director Jonathan Anderson, which “gradually arrived in stores and were immensely popular.”
Cabanis said more shoes and bags by Anderson should reach stores in the second quarter, further improving Dior’s fortunes.
“In China, we’ve seen a good response to the newness and the products, especially what we have been starting to put in stores by Jonathan Anderson,” she said. “And we’ve opened Louis Vuitton The Place in Seoul, a new flagship, which has reconnected the Korean customer and the brand and growth has rebounded in this important market.”
She suggested the focus on newness in products and retail experiences would continue, along with “pushing our icons.”
In watches and jewelry, the company highlighted “an excellent performance” at Tiffany & Co., with its HardWear line posting “very strong” growth, alongside traction with the Knit and Sixteen Stone ranges.
LVMH trumpeted solid revenue growth and market-share gains for Sephora across all regions, with the U.K. a particular standout. Meanwhile, Champagne enjoyed a “good start to the year, particularly in Europe,” and cognac was boosted by a favorable calendar effect for Chinese New Year.
Cabanis was peppered with questions about the Chinese cluster, U.S. prospects and the fashion and leather goods unit.
She described the improvement in Asia as “broad-based” and stressed that the first quarter demonstrated “very good progress in most businesses.”
LVMH does not break down performance by brand, but Cabanis described Vuitton as “more resilient than the average” in fashion and leather goods, with Dior “improving quite a lot versus previous quarters.
“Then you have Loro Piana still growing double digits, Rimowa also outperforming the average, and the rest of the brands below the average,” she said. The latter group would include the likes of Givenchy, Celine, Fendi and Loewe.
Despite the volatile geopolitical context, many equity analysts are forecasting a rebound for luxury in 2026.
HSBC has a buy rating on all the luxury companies it covers except Swatch, its optimism underpinned by renewed creativity at key fashion brands, more attractive price points, solid prospects in the U.S. and improvements in China.
Still, most stocks have taken a hit in the wake of the Middle East conflict, low visibility on China’s recovery and, according to TD Cowen, a “slower than expected ramp of newness.”
LVMH, which has seen its share price has sunk about 25 percent year-to-date, was the first big luxury group to report first-quarter sales. Kering is scheduled for Tuesday, Hermès International on Wednesday and Prada Group on April 30.