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Executive Summary: Navigating Headwinds Towards a 2026 Rebound
LVMH Moët Hennessy Louis Vuitton SE, the world’s leading luxury goods group, experienced a challenging start to 2025 due to a “normalisation” of post-pandemic demand, macroeconomic uncertainties, and currency fluctuations, which resulted in revenue and profit declines in the first half of the year. However, a significant turnaround was observed in the third quarter of 2025, driven by a crucial rebound in the Asian market, particularly China, and solid local demand in Europe and the US. This inflection point positions the Group for a more favorable outlook in 2026, with analyst consensus pointing to a return to sustained growth and stabilization of its exceptional profitability margins.
2025 Performance Analysis: A Year of Two Halves
Revenue and Sales Growth
The first half of 2025 saw LVMH’s revenue decline by approximately 4% to €39.8 billion, with organic growth also down. This was primarily driven by:
- Fashion & Leather Goods: The largest and most profitable division saw an 8% decline in reported revenue in H1 2025, though it remained highly resilient.
- Wines & Spirits: This division, impacted by normalization of champagne demand and trade tensions affecting cognac in key markets (US and China), posted an 8% reported revenue decline.
- Japan Market Reversal: Japan, which saw exceptional growth in 2024 due to the weak Yen-driven tourist spending, experienced a decline in the first half of 2025 as the trend reversed.
- Asia Ex-Japan Rebound: Sales in Asia (excluding Japan) returned to growth, including a positive shift in China, a key indicator of recovery in the global luxury market.
- Selective Retailing: The Sephora brand continued its strong performance and market share gains, driving a 7% organic growth for the Selective Retailing division in Q3 2025.
Profitability Trend Analysis (2025)
Profitability faced substantial pressure in the first half of 2025.
- Profit from Recurring Operations (H1 2025): Decreased by approximately 15% to €9 billion, resulting in an operating margin of 22.6% (down from 25.6% in H1 2024).
- Net Profit (Group Share) (H1 2025): Tumbled by an estimated 22% to €5.7 billion.
- Key Profit Drivers: The decline was mainly attributed to higher operational costs, adverse currency fluctuations, and the negative leverage effect from the slowdown in the high-margin Fashion & Leather Goods division. Despite the profit decline, the Fashion & Leather Goods segment maintained an exceptional operating margin, which remains the primary driver of group profitability, historically contributing approximately 75% of the total operating profit.
2026 Outlook and Forecasted Profitability Trajectory
Market Recovery and Growth Drivers
The positive momentum established in Q3 2025 is expected to serve as a foundation for a stronger 2026. Analysts forecast a return to sustained organic growth for LVMH, driven by several key factors:
- Chinese Demand Rebound: A major driver is the anticipated continued improvement in Chinese consumer demand, supported by post-pandemic savings and increased spending on luxury items, which could accelerate revenue growth in Asia.
- Market Stabilization: Stabilization of demand in the crucial US and European markets, coupled with easier year-over-year comparisons, is expected to provide a tailwind.
- Product Innovation and Brand Desirability: The Group’s long-term strategy, focusing on high-quality products and the powerful appeal of its iconic brands (Louis Vuitton, Dior, Moët & Chandon), is expected to reinforce its market leadership.
- Segment Recovery: The Wines & Spirits and Watches & Jewelry segments, which were impacted in 2025, are forecast to bottom out and project operating profit growth of over 10% in fiscal year (FY) 2026.
Projected Financials and Profitability (2026)
Analyst consensus forecasts for LVMH in FY 2026 indicate a robust recovery and stabilization of financial metrics:
| Metric | FY 2025 (Forecast) | FY 2026 (Forecast) | Implied Trend |
|---|---|---|---|
| Revenue (in € billions) | Approx. 101.4 | Approx. 106.4 | Strong Growth Acceleration |
| Net Income (in € millions) | Approx. 17,893 | Approx. 19,467 | Significant Growth |
| Adjusted EPS | Approx. 35.78 | Approx. 39.02 | Solid Double-Digit Growth |
| Profit Margin (%) | Approx. 18.4% | Approx. 18.6% | Margin Stabilization/Slight Improvement |
Profit Margin based on Net Income / Revenue estimate.
The profitability trend is expected to stabilize, with the Fashion & Leather Goods segment’s operating profit margin forecast to continue its stabilization in 2026, with an outlook for further increase in 2027 to 35.4%. The Group’s overall financial structure remains stable, characterized by a moderate debt-to-equity ratio and strong cash flow generation, which supports its long-term investment strategy.
Conclusion
The 2025 performance of LVMH demonstrated resilience and a strategic pivot in the face of a challenging luxury market correction. The company successfully navigated a difficult first half by leveraging the power of its core brands and experiencing a significant organic growth turnaround in the third quarter. The outlook for 2026 is decidedly positive, with strong consensus forecasts for accelerating revenue and earnings growth, driven by an expected rebound in key Asian markets and stabilized demand elsewhere. The core profitability trend, while experiencing pressure in early 2025, is poised to stabilize and potentially improve in 2026, maintaining the Group’s leadership position in the global luxury sector.