LVMH reported Q2 2025 revenue of €21.1 billion, up 3 percent organic growth, with its Fashion & Leather Goods division—representing 48 percent of group sales—returning to positive territory after three consecutive quarters of decline. The division posted low single-digit growth in the period, reversing a 4 percent contraction in Q1 and marking the first expansion since Q3 2024.
The turn matters because Fashion & Leather, anchored by Louis Vuitton, Dior, Fendi, and Celine, has been the primary drag on consolidated performance since mid-2024. Chinese consumer spending on luxury goods contracted 11 percent year-over-year in the twelve months through March 2025, and LVMH's Greater China revenue fell 8 percent in Q1. The Q2 stabilization suggests that the floor is in. Management noted that Mainland China demand improved sequentially, while Hong Kong and Macau remained weak but no longer deteriorating. European sales, particularly in France and Italy, grew mid-single digits, offsetting continued softness in the U.S., where revenue was flat.
The signal extends beyond one conglomerate. LVMH is the bellwether for €1.5 trillion in global personal luxury goods spend, and its Fashion & Leather margin profile—historically 38 to 42 percent operating margin—sets pricing power expectations across the sector. Hermès, Kering, and Richemont report in the next three weeks. If LVMH's Chinese stabilization is confirmed by peers, the re-rating of European luxury equities will accelerate. The MSCI Europe Textiles, Apparel & Luxury Goods Index is up 9 percent year-to-date but still trades at 18x forward earnings, below the five-year average of 22x. A return to mid-cycle multiples implies €80 billion in incremental market cap across the top ten names.
Two factors complicate the narrative. First, LVMH's Selective Retailing division, which includes Sephora and DFS, grew 8 percent, masking the Fashion & Leather slowdown in headline figures. Analysts will parse same-store sales and traffic data when the full release drops. Second, inventory levels across the luxury channel remain elevated. LVMH's own inventory-to-sales ratio was 29 percent at year-end 2024, up from 26 percent in 2022. If the Chinese recovery is shallow, promotional pressure returns by Q4.
Watch three follow-on events. Kering reports Q2 on July 24; Gucci's performance will either confirm or contradict LVMH's Chinese thesis. Hermès reports July 25; if Birkin wait-lists are shortening, the ultra-high-end is softening. And LVMH will release same-store sales detail in the full H1 report on July 30. If Fashion & Leather same-store sales are negative despite headline growth, the recovery is inventory liquidation, not demand.
The luxury cycle turns on $48 billion in annual Chinese consumer spending on European brands. LVMH just said the bottom is behind us.
The takeaway
LVMH Fashion & Leather returns to growth after three-quarter contraction; Chinese demand stabilizes, sector re-rating begins if peers confirm.
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