LVMH Moët Hennessy Louis Vuitton posted second-quarter revenue of €21.8 billion, up 1 percent organically year-over-year, with its Fashion & Leather Goods division—responsible for 48 percent of group sales—returning to growth for the first time since Q1 2024. The segment recorded low single-digit organic expansion, reversing four consecutive quarters of contraction. European luxury equities lifted on the print; Hermès, Kering, and Richemont each rose between 1.2 percent and 2.7 percent intraday. LVMH shares climbed 2.1 percent before settling 1.6 percent higher in Paris.
The Fashion & Leather turnaround was narrow. Louis Vuitton and Dior drove the result through targeted price architecture adjustments and restocking in Japan, where inbound Chinese tourism spending rose an estimated 11 percent quarter-over-quarter. Celine and Loewe posted flat to negative comps. Watches & Jewelry fell 4 percent organically; Selective Retailing, which includes Sephora and DFS, grew 3 percent but decelerated from 6 percent in Q1. Wines & Spirits contracted 8 percent, marking the seventh consecutive quarter of decline as Hennessy cognac destocking in the U.S. persists and China's baijiu substitution continues. Perfumes & Cosmetics grew 4 percent, supported by Dior fragrance and makeup in North America.
The Middle East, which had been absorbing 12 percent to 15 percent annual growth since 2021, decelerated sharply. LVMH did not disclose regional organic growth figures, but Hermès—reporting the same day—confirmed Middle East sales growth slowed to 3 percent in the first half of 2025 from 22 percent in 2024. The region's luxury spending had been propelled by elevated oil revenues, fiscal expansion in Saudi Arabia and the UAE, and tourist flows from South Asia and the Levant. That cycle is compressing. Brent crude averaged $77 per barrel in Q2 2025, down from $83 a year prior. Saudi Arabia's Vision 2030 infrastructure commitments are 18 months behind schedule, and consumer credit growth in the UAE has slowed to 4.1 percent annualized, the weakest since 2020.
LVMH's full-year 2025 revenue is tracking toward €84 billion to €85 billion, down 5 percent year-over-year and below the €86.2 billion consensus from February. Operating margin contracted 190 basis points to 26.1 percent in the first half, driven by Fashion & Leather's promotional activity in Japan and North America, and fixed-cost deleverage in Watches & Jewelry. The company has underperformed Richemont, which posted 7 percent organic growth in Q1 2025, and Hermès, which grew 12 percent in the first half. LVMH's organic growth of negative 3 percent year-to-date places it closer to Kering's negative 11 percent than to the sector's high-single-digit growers.
Allocators should monitor three follow-on events. First, China's post-Golden Week consumption data in early October, particularly UnionPay luxury transaction volumes, which fell 6 percent year-over-year in Q2. Second, LVMH's third-quarter print in mid-October, when Fashion & Leather comps against the weakest base of 2024—if growth doesn't accelerate materially, the narrative shifts from cyclical recovery to structural share loss. Third, Saudi Arabia's Q3 GDP print in late October, which will clarify whether the kingdom's 2.3 percent growth in Q1 was an outlier or the start of a longer deceleration.
The Fashion & Leather return is tactical, not strategic. LVMH moved €640 million in unsold spring inventory through Japanese department stores at 12 percent to 18 percent discounts, a margin headwind the company absorbed to clear channels before autumn product drops. The Middle East deceleration removes €1.1 billion to €1.3 billion in annual revenue momentum that was assumed to persist through 2026. What remains is whether European and North American HNW spending—still flat to down low single digits—can offset the twin headwinds of Chinese aspiration fatigue and Gulf normalization. LVMH has €34 billion in net cash and will likely redirect €2 billion to €3 billion toward selective M&A in beauty or hospitality by year-end, sectors where pricing power hasn't yet eroded.
The takeaway
LVMH's Fashion & Leather stabilization is channel clearing, not demand recovery; Middle East slowdown removes €1.2bn assumed tailwind.
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