LVMH: The Decline No One Saw Coming
About this episode
This episode analyzes the spectacular decline of LVMH, the French luxury giant, whose revenue dropped by 6% in the first quarter, leading to a 27% fall in its stock price year-to-date and a loss of €237 billion in market capitalization over three years. This downturn, which also affects other luxury players like Kering (-66% in 5 years) and Hermès, is attributed to a combination of structural and cyclical factors. The European luxury sector has lost over €100 billion in market capitalization since the beginning of the year, marking LVMH's worst first quarter in its history.
Three main reasons are put forward to explain this crisis. First, a "worrying disappearance of customers," with 70 million fewer buyers in three years, primarily "aspirational" clients who find prices too high (Dior +51% in 3 years, Chanel +59%). The market is polarizing, with 2% of clients accounting for 46% of sales, and consumers are shifting towards second-hand goods or experiences rather than objects. Second, geopolitical and trade tensions, particularly US tariffs imposed by the Trump administration (threats of 200% on French champagne) and declining consumption in the Middle East and China, are severely impacting sales. Finally, the episode highlights Bernard Arnault's actions, who repurchased €771 million worth of LVMH shares in 90 days, increasing the family's stake to 50.01% of the capital, a symbolic gesture of confidence and a strategic move for succession planning.
Despite the total luxury market projected to reach €2,700 billion by 2035, its landscape is rapidly changing, favoring services and experiences over material goods. The growth model based on constant price increases and an expanding middle class is deemed obsolete. For investors, the timing is not yet ideal for buying, as the correction could extend for two more quarters and activity may stagnate in 2026. The advice is to hold existing luxury stocks and aim for the long term, with a rebound expected next year.
Top 3 insights to remember
70% of global luxury demand depends on the Chinese consumer
China's real estate crisis undermined confidence and luxury spending
Post-Covid normalization also affects Western demand
10 key findings
LVMH reported first-quarter revenue of €19.1 billion, a 6% decline year-over-year, and its stock price has fallen by 27% since the beginning of the year.
Bernard Arnault's fortune dropped from 1st to 7th place on the Forbes ranking, settling at €171 billion, while LVMH lost 50% of its value from its peak three years ago, amounting to €237 billion.
The European luxury sector collectively lost over €100 billion in market capitalization since the start of the year, with Kering's value plummeting by 66% over five years.
The number of active luxury product buyers decreased by 70 million in three years, from 400 million in 2022 to 330 million in 2025, primarily due to rising prices.
Luxury product prices have sharply increased post-Covid, with Dior inflating its prices by 51% and Chanel by 59% in three years, alienating "aspirational" customers.
The luxury market is polarizing, with only 2% of clients accounting for 46% of global sales, while the second-hand market is worth €50 billion and growing by 4-6% annually.
Luxury consumers are spending less on objects and more on high-end experiences (cruises, gastronomy, hospitality), impacting LVMH's core business.
US tariffs imposed by the Trump administration had a significant impact, leading to a 30% to 47% drop in French wine and spirits sales in the United States in the second half of 2025.
Bernard Arnault repurchased €771 million worth of LVMH shares in 90 days through his holdings, bringing the family's stake to 50.01% of the capital and 65.94% of voting rights, a gesture of confidence and strategic control.
The total luxury market is expected to reach €2,700 billion by 2035, but it will be dominated by services and experiences, and the growth model based on price increases and an expanding middle class is considered obsolete.
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The analyses presented reflect MoneyRadar's past positions and do not constitute investment advice.