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LVMH Stock Dips Despite Solid 2025 Performance
31 Jan
Summary
- LVMH's revenue fell 1% organically in 2025, with growth turning positive in H2.
- Operating margin remained strong at 22%, near historic highs despite FX headwinds.
- Investor sentiment shifted as luxury growth expectations reset post-COVID boom.
In 2025, LVMH demonstrated resilience with revenue holding steady at a 1% organic decline, and second-half growth turning positive. Operating margins remained robust at 22%, reflecting strong brand pricing power and cost management, despite currency headwinds that shaved 3 points off revenue growth.
However, investor sentiment has cooled as the luxury market transitions from a hypergrowth phase to one of slower, compounding returns. Macroeconomic factors such as China's uneven recovery, normalization in the U.S., and a strong euro have reset expectations, leading to a notable disconnect between LVMH's operational strength and its stock performance.
The Fashion & Leather Goods division, LVMH's core, saw revenue fall 5% organically but improved in the second half. Wines & Spirits faced challenges, particularly cognac, due to high inventories and slower Chinese demand. Conversely, Watches & Jewelry grew 3% organically, and Selective Retailing, boosted by Sephora and DFS, rebounded strongly.
LVMH's financial health remains strong, with healthy cash flows and near-historic profit levels. The market's current focus is not on execution but on the future narrative of growth within the luxury sector, leading to a repricing of expectations for sustained high-paced expansion.
