LVMH Moët Hennessy Louis Vuitton, the world’s largest luxury goods conglomerate, just surprised the world with a negative first-quarter sales print. These sales decreased by 3% from last quarter and last year at this time. The drop was worse than analyst expectations of zero growth at a minimum. Unsurprisingly, LVMH’s stock price tumbled, dropping over 7.7% in the two days surrounding the announcement. The sudden drop was enough to put LVMH’s crown as the world’s top luxury company in jeopardy. It faced a tough battle to keep its lead over competitor Hermès.
LVMH’s wines and spirits division—the largest in terms of operating profit—suffered a shocking 9% drop in revenue. It was this sharp drop that mostly fueled the terrible performance. According to the company, the drop was primarily due to weakened demand for cognac. All key markets, including the United States and China, are seeing this downturn. Analysts caution that these results expose deep cracks in the luxury market. They blame much of this strain on U.S. President Donald Trump’s erratic trade policies.
Citi analysts Thomas Chauvet and Mahesh Mohankumar commented on the situation, stating there was “not much to cheer for at LVMH,” highlighting that the sales figures were “overall below the most conservative buyside expectations.” The analysts cautioned against wagering on any positive revenue surprise from LVMH over the next few quarters. Economic uncertainty both here in the U.S. and globally as well only increases the challenge before us.
With growth numbers that didn’t live up to expectations, LVMH didn’t know where to turn. European stock indices surged on Tuesday, as investors anticipated some relief from Trump’s tariff regime. Some investors believe that a shift in trade policies would help LVMH and strengthen its stock performance. Last week, Dan Ives, the global head of technology research at Wedbush Securities, sounded the alarm. He added that if Trump’s tariffs on technology come into play, those measures would dramatically impact tech companies as well as high-end brands like LVMH.
As a result, LVMH has over the years been considered the gold standard for the luxury industry. Its recent slip in sales is calling into question whether it can continue to be the world’s most valuable luxury stock. The homebuilding company’s stock performance has mainly been driven by the favorable picture created by Trump’s tariffs and the persistent uncertainty surrounding the global economy.
“These figures indicate that labor market activity was sluggish in the run-up to this month’s substantial surge in tax and tariff costs, with unease over these twin threats limiting hiring plans.” – Suren Thiru
That said, the larger overall luxury market today is facing a perfect storm of headwinds from changing consumer demand and geopolitics. Analysts have noted that many businesses are “likely hoping for changes in the tariff regime before making more lasting strategic decisions,” suggesting that companies like LVMH may adopt a cautious approach in the near term.
As LVMH’s share price fell sharply on Tuesday morning, at one point declining nearly 8%, the company lost its position as the world’s largest luxury firm to Hermès. This transition underscores the depth of competition across the entire luxury ecosystem as well as the potential concerns surrounding LVMH’s growth path going forward.
After all this bad news, there is a moment of hope. In fact, analysts believe that the worst panic over the tariffs might be behind us. Sam Meredith noted, “Whilst it seems clear that at the very least EU OEM US import tariffs will remain in place, the time of peak tariff panic may now be behind us.” When viewed through this lens, it’s clear that much of the pressure luxury brands are currently under may abate with improved trade relations.
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