LVMH reported first-quarter revenue of €23.6 billion, beating consensus estimates of €22.8 billion and marking the first quarter in six where China-exposed luxury names outperformed guidance. The 3.5% organic growth—driven by Fashion & Leather Goods and Selective Retailing—signals that Chinese consumers are returning to discretionary spend after prolonged real-estate and confidence headwinds. Operating margin held at 26.8%, flat year-over-year, ending the sector's eighteen-month margin compression cycle.
The Fashion & Leather Goods division, anchored by Louis Vuitton and Dior, delivered €10.2 billion in revenue, up 4.1% organically. Watches & Jewelry grew 6.3% despite a muted Swiss export backdrop, suggesting brand-level pricing discipline is intact. Selective Retailing—Sephora and DFS—rose 5.7%, with mainland China store traffic up double digits for the first time since Q2 2023. Wines & Spirits declined 2.1%, as expected, on Cognac inventory destocking in the U.S. and ongoing tariff uncertainty.
The margin stabilization matters more than the topline beat. Luxury multiples compressed through 2023 and early 2024 on fears that aspirational buyers in Asia had permanently repriced downward, forcing brands into promotional spirals. LVMH's ability to hold 26.8% operating margin—without relying on outlet channel acceleration or markdown velocity—suggests pricing power remains firm at the highest tiers. The Street had modeled 25.9% to 26.4%, anticipating some give on gross margin to stimulate volume. That discipline did not materialize, and it resets the margin floor for Kering, Richemont, and Hermès when they report in coming weeks.
For allocators, this is the first hard evidence that China's consumer tailwinds are structural, not sentiment-driven. Mainland China same-store sales grew 11% in the quarter, and Hainan duty-free sales—the canary for domestic luxury appetite—rose 14% after eight quarters of decline. Travel retail in Europe and Japan also improved, with Chinese tourist spending up 8% year-over-year in Paris and 13% in Tokyo, per LVMH's regional breakdown. The U.S. remains soft, down 1.2%, as aspirational buyers pull back and the middle tier of luxury—Coach, Michael Kors, Tapestry—continues to bleed share.
Watch for Kering's Q1 sales release on April 23rd, where Gucci's performance will test whether LVMH's China strength is category-wide or brand-specific. Richemont reports April 30th; Cartier and Van Cleef & Arpels will clarify if jewelry appetite in China is durable or front-loaded from Lunar New Year. Hermès, the sector's margin king, reports May 2nd and typically leads LVMH by 200-300 basis points on operating margin; any compression there would challenge the narrative that ultra-luxury is insulated.
LVMH's CFO noted that April trends in China are tracking "in line with Q1," which implies no sequential deceleration. That keeps the sector's 2025 earnings revisions positive for another quarter.
The takeaway
LVMH's €23.6B Q1 revenue and 26.8% margin hold reset luxury sector assumptions; China spending is structural, not sentiment-driven.
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