LVMH reported a 5% decline in organic sales for its fashion and leather goods division in the third quarter, missing analyst expectations due to weak demand in China.
LVMH, the world’s largest luxury goods group, reported a 5% decline in organic sales for its fashion and leather goods division in the third quarter of 2026. The result marks a setback for the unit, which includes Louis Vuitton and Dior, after it posted its first period of growth in two years during the previous quarter. The decline exceeded the 1.8% drop expected by analysts, according to a Visible Alpha consensus cited by CNBC.
The slowdown in China was the primary driver of the division's underperformance. LVMH stated that the business was "affected in the third quarter by the slowdown in demand in China," despite continuing to benefit from a "buoyant US market." Group sales in Asia excluding Japan fell 5% from a year earlier, while US sales growth slowed slightly to 5% from 6% in the second quarter.
Cécile Cabanis, LVMH chief financial officer, addressed the regional challenges on an analyst call. "In the third quarter specifically, Asia was penalised by a sharp macro-led deterioration in Chinese consumer sentiment, with a tangible impact on discretionary expenses," Cabanis said. She added that while the company sees "nothing structural or specific that would impair the recovery," it will "take a bit more time."
The fashion division’s struggles were compounded by specific brand issues. Louis Vuitton faced a backlash in China following a trademark dispute with tea brand Molly Tea, which critics linked to traditional Chinese motifs. James Grzinic at Jefferies noted that the incident "seems to have had a fairly extreme impact on trends at Vuitton in China." Additionally, Cabanis cited a one-off logistics problem that knocked approximately one point of growth off Louis Vuitton’s quarterly performance.
Despite the weakness in its flagship division, LVMH’s overall group sales rose 1% on an organic basis to €18.5 billion, missing the 1.3% growth expected by analysts. The group’s performance was supported by strong demand in other sectors, including selective retailing, watches, and jewellery.
Key divisional results for the third quarter include:
Dior, the group’s second-biggest brand, showed positive momentum. LVMH reported "especially strong" demand for new designer Jonathan Anderson’s ready-to-wear and leather goods lines. Cabanis confirmed that Dior sales were positive in the year so far.
LVMH’s results are viewed as a bellwether for the broader luxury industry, which has faced a near four-year downturn. The group’s share price is down nearly 40% this year, with its market value falling to approximately €190 billion, more than halving from its 2023 peak. Europe’s leading luxury groups have collectively lost around €330 billion in market value since the start of the year.
Investor concerns extend beyond China. Credit card data from Citibank indicated that spending on luxury goods in the US fell at least 4% in each of the last three months, suggesting potential weakness in the American market. Geopolitical instability, including conflict in the Middle East, and inflationary pressures continue to weigh on consumer confidence.
LVMH’s third-quarter results signal that the luxury sector’s recovery remains fragile. The decline in the fashion and leather goods division, which accounts for nearly half of group revenue and three-fourths of profit, challenges hopes that the industry is emerging from its multi-year slump. With China’s economic headwinds persisting and US growth slowing, luxury brands face increasing pressure to find new avenues for expansion while maintaining brand desirability.
Sources
This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.
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