LVMH reported second-quarter sales that met consensus and confirmed its Fashion & Leather Goods division—responsible for roughly 48% of group revenue—returned to positive growth after two quarters of contraction. Shares opened 2% higher in Paris on Tuesday morning, then reversed course to close 2.56% lower by end of session. The whipsaw suggests institutional profit-taking outweighed the headline beat, a pattern that has marked luxury exits since March.
The Fashion & Leather segment, anchored by Louis Vuitton and Dior, posted low-single-digit organic growth after declining 1% in Q4 2024 and 2% in Q1 2025. LVMH did not disclose the exact growth rate but confirmed the division exited negative territory. Group revenue for the quarter came in at €21.8 billion, up 3% organically, matching the 3.1% consensus compiled by FactSet. Watches & Jewelry and Selective Retailing both posted mid-single-digit declines, while Wines & Spirits remained flat. The company maintained its full-year guidance of mid-single-digit organic revenue growth, unchanged from April.
The intraday reversal matters because it mirrors allocator behavior across European luxury over the past six months. Hermès, Kering, and Richemont have all seen similar price action on earnings days—initial relief rallies followed by session-end selloffs as managers lock in basis rather than add exposure. The pattern reflects two concerns: Chinese consumer spend remains 15-18% below pre-COVID levels in dollar terms, and U.S. aspirational buyers are shifting spend toward experiences rather than leather goods. LVMH's Selective Retailing division, which includes Sephora and DFS, posted a 4% decline, the third consecutive quarter of contraction. That segment is the most exposed to airport and travel retail, which had been expected to recover faster.
The return to growth in Fashion & Leather is structural progress, but the stock's inability to hold morning gains suggests the market is pricing in a slower recovery than management implied. LVMH trades at 22x forward earnings, a 12% discount to its five-year average of 25x, and the lowest multiple since early 2020. Kering, by comparison, trades at 18x despite deeper declines in its core Gucci brand. The valuation spread implies the market expects LVMH's pricing power to compress or for the China recovery to stall through year-end.
Operators and allocators should watch three follow-on events. First, Kering reports July 25, and any further deterioration in Gucci's organic growth—currently down 20% year-over-year—will weigh on sector sentiment regardless of LVMH's stabilization. Second, China's July retail sales data, due mid-August, will clarify whether May and June's modest uptick in luxury spend was inventory restocking or genuine consumer demand. Third, LVMH's Watches & Jewelry division, which declined 5% in Q2, faces a difficult comparison in Q3 as Tiffany's U.S. store traffic remains 10-12% below 2023 levels. If that division posts a second consecutive mid-single-digit decline in October, the market will reprice LVMH's multiple toward Kering's 18x floor.
The reversal was not panic. It was allocators choosing to exit a trade that no longer pays for the wait.
The takeaway
LVMH's Fashion & Leather returned to growth, but the 2.56% session reversal signals allocators pricing slower China recovery through Q4.
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