LVMH Sales Rise Boosted by China Recovery

• Fourth-quarter sales of 22.7 billion euros beat expectations (1% growth vs. forecasted 0.3% decline), with watches and jewelry up 8% but fashion and leather down 3%
• Annual operating profit declined 9% with margins pressured by currency moves (over half the decline), U.S. tariffs on alcohol, and record gold prices increasing jewelry import costs
• Chinese domestic sales rose in the quarter confirming recovery, while weaker dollar led to 2% decline in European sales as U.S. tourists spent less; CEO Arnault expressed caution about the year ahead

LVMH Sales Rise Boosted by China Recovery - Summary

Key Performance Metrics:

LVMH reported Q4 2025 sales of €22.7 billion ($27.1 billion), up 1% on a like-for-like basis, beating analyst expectations of a 0.3% decline. However, annual operating profit fell 9%, with margins significantly pressured by multiple headwinds.

Company & Sector Performance:

The world's largest luxury group, owner of Louis Vuitton and Tiffany, showed mixed divisional results. Watches and jewelry sales surged 8%, exceeding forecasts, while the critical fashion and leather division—which generates most profits—declined 3% on a currency-adjusted basis, meeting expectations.

China Recovery:

Domestic Chinese sales returned to growth in Q4, confirming a recovery LVMH has signaled for months. Chinese consumers, including tourists abroad, represent approximately one-third of the company's fashion and leather sales according to UBS. Strategic investments include a high-performing ship-shaped Louis Vuitton flagship store in Shanghai and a new Dior store in Beijing.

Margin Pressures:

Multiple factors compressed margins: currency effects accounted for over half the profit decline, U.S. tariffs impacted alcohol exports, and record gold prices increased jewelry import costs. A weaker dollar also reduced U.S. tourist spending in Europe.

Regional Sales:

Asia (including China) sales rose 1%, U.S. sales increased 1%, while European sales fell 2% due to decreased American tourist spending.

Market Outlook:

CEO Bernard Arnault expressed caution for 2026, citing geopolitical crises, economic uncertainty, and domestic tax policies. The company plans to limit costs and expenses. Barclays analysts suggested results "could bring a bit more prudence to the sector," despite recent positive surprises from competitors.