Lvmh sees luxury growth slow as fashion sales dip, middle east impact felt

Louis Vuitton and Dior face headwinds as LVMH reports a modest 1% organic sales increase for the first quarter of 2026, a figure that falls short of investor expectations and highlights a shifting luxury landscape.

Fashion struggles amidst global uncertainty

Despite a broader improvement compared to the previous year’s fourth quarter, LVMH’s core fashion and leather goods division experienced a 2% decline, signaling a potential vulnerability within the group’s portfolio. Analyst Luca Solca at Bernstein noted that this performance ‘likely isn’t enough to convince investors to step off the fence,’ suggesting a cautious approach to the conglomerate’s future trajectory.

Cécile Cabanis, LVMH’s CFO, painted a nuanced picture, emphasizing the resilience of brands like Louis Vuitton and Dior, particularly Dior, which showed considerable improvement. However, brands such as Loro Piana and Rimowa continued to outperform, while the majority of the group’s brands lagged behind. The impact of the ongoing conflict in the Middle East was particularly pronounced, reducing organic growth by approximately 1% due to a significant drop in demand – estimates ranging from 30% to 70% in affected malls.

Geographic shifts and creative momentum

While the US saw a modest 3% growth, driven by strong Chinese New Year sales and increased local spending, Europe and Japan experienced a 3% downturn. Asia, outside of China, demonstrated promising growth at 7%, a figure attributed to the festive period. The CFO highlighted a positive response to new creative initiatives, product launches, and enhanced in-store experiences, leading to improved conversion rates across key brands. The initial reception to Jonathan Anderson’s designs at Dior, primarily ready-to-wear, proved initially underwhelming, with the full collection expected to arrive in subsequent quarters.

Watches and jewelry, spearheaded by Tiffany’s and Bulgari’s strong performance, contributed significantly to the 7% growth in that category. Perfumes and cosmetics remained flat, while selective retailing, encompassing Sephora, saw a 4% increase. The wines and spirits division benefited from a robust start to the year for champagne, particularly in Europe, fueled by Chinese New Year celebrations. Despite these gains, LVMH acknowledged volatility in the market and reaffirmed its focus on strategic investments.

Looking ahead, Kering and Hermès are expected to report their first-quarter earnings this week, alongside Moncler and Prada. The performance of Richemont, focusing on jewelry and watches, will also be closely watched. Ultimately, LVMH’s results reveal a complex picture of resilience and vulnerability, reflecting the broader challenges facing the luxury sector in a rapidly changing world.