Luxury conglomerate LVMH reported better-than-expected earnings and second-quarter organic revenue growth after the bell on Tuesday, as a recovery in the division’s business in China begins to show on its balance sheet.
Organic revenue increased 1% in the fourth quarter, flat from the year-ago period. For the full year, revenue was down 1%.
The company reported fourth-quarter sales of 22.7 billion euros, beating LSEG’s forecast of 22.2 billion euros. For the full year, sales amounted to 80.8 billion euros.
Asia ex-Japan has seen a marked improvement in trends compared to 2024, with a return to growth in the second half of this year, the company said.
Despite improvements, CEO Bernard Arnault said “2026 will not be simple” and warned of an “unpredictable” and “disruptive” economic situation.
LVMH is the parent company of 75 different luxury brands. The company’s fashion and leather goods division, where fashion brands such as Louis Vuitton, Dior and Fendi account for most of its profits, saw organic sales fall 5% for the year, a sharper decline than the 1% drop in the same period last year.
In October, LVMH shares soared 12% the day after the company announced that third-quarter organic growth was back in positive territory. The results, along with those from peers, fueled investor optimism that the dark clouds surrounding luxury goods over the past two years as Chinese consumers fell in spending are beginning to turn around.
“After a reassuring third quarter, market expectations are probably even higher heading into the fourth quarter,” Barclays analyst Carol Maggio said ahead of the LVMH report.
Majot expects the luxury goods industry to continue its recovery in 2026, with the sector as a whole expected to grow by around 5-6% in constant currencies.
Majo said the United States should remain the main driver of growth while China continues to stabilize. However, he added: “While investor sentiment towards the sector has become more positive, we would like to remind you that some risks remain as valuation demands have become more demanding. EPS upgrades are still a long way off and there is no guarantee that eager shoppers will return.”
Luxury brands that experienced rapid growth in the early days of the coronavirus pandemic have diverged. Owners of LVMH and Gucci, etc. keringThe company, which relies heavily on its fashion and leather sectors, was in trouble. But stores with more exposure to high-end luxury items like jewelry and generally attracting affluent shoppers performed better.
The world’s second largest luxury company announces financial results for the current fiscal year RichemontThe Cartier and Van Cleef owner reported a better-than-expected December quarter, with sales in reporting currencies up 4% year over year. The results were driven by strong demand for the company’s fine jewelry, which Bernstein analysts called “long-term structural appeal.”
meanwhile, burberry The company also beat expectations for revenue growth last quarter, which CEO Joshua Shulman attributed in part to the company’s success attracting Gen Z consumers in China, where it has focused its marketing efforts.
“Chinese consumers may be showing positive signs, but the path to recovery remains fragile, highlighted by consecutive quarters of slowdown (despite Richemont’s difficult performance) in China,” Bernstein analyst Luca Sorca said.
“Luxury brands can no longer rely on a steady stream of newly created luxury consumers to drive growth in the region and will need to bridge the K-shaped economy elsewhere.”
