Luxury conglomerate LVMH experiences a 22% decline in profits due to ongoing challenges in the luxury market.

LVMH Moët Hennessy Louis Vuitton, the world’s largest luxury goods company, has announced a 4% year-over-year decline in revenue for the first half of fiscal 2025. The company's struggles come amid a reported slowdown in the personal luxury goods sector and changing consumer preferences.

Fashion and Leather Goods Division Takes a Hit

The company's largest division, fashion and leather goods, saw an 8% year-over-year decline in revenue for the first half of the year. This drop could be a result of young consumers shifting to more trendy luxury brands like Prada and Miu Miu, according to industry analysts.

Tourism and Trade Tensions Affect Global Revenue

Cecile Cabanis, LVMH’s chief financial officer, attributed the company’s global revenue challenges to a change in tourism. She explained that the impact of tourism is more significant in Asia than in the West. In fact, many Chinese shoppers are still refraining from buying luxury goods as the government cracks down on those showing off their wealth on social media.

Additionally, organic revenue in Japan plummeted 28% in the second quarter of 2025 for LVMH, due in part to trade tensions weighing on consumers in China. Japan benefited from exceptional demand last year driven by the yen weakness, but saw a reversal in Q2.

Leadership Shuffles and New Appointments

LVMH has also been undergoing leadership changes. In April, the company shuffled the leadership at three key brands, and in July, LVMH named a new CEO for its Americas division.

Perfumes and Cosmetics Division Also Declines

The perfumes and cosmetics division of LVMH also saw a decline, with revenue down for the first half of fiscal 2025. The watches and jewelry division was down 1% for the same period.

Analysts Offer Optimistic Outlook

Despite the challenges, analysts remain optimistic. Jelena Sokolova, an analyst with Morningstar, expects revenue to recover somewhat for LVMH. She believes that growth for LVMH will be supported by normalizing demand from Chinese and U.S. consumers.

Smaller Luxury Firms Report Revenue Increases

Smaller luxury firms like Brunello Cucinelli and Richemont have reported revenue increases and upticks in Q1 and Q2 respectively, indicating a potential shift in the market.

No Significant Revenue Increases in the Luxury Market

None of the luxury brands reported a revenue increase of at least 10% in the first half of fiscal year 2025; in fact, Designer Brands, a notable luxury retailer, reported a 4.2% decline in net sales for Q2 2025 and a 5% decline in comparable sales.

Net Profit Declines

The decline in revenue was reflected in LVMH's net profit, which sank 22% for the same period, and profit from recurring operations was down 15%. LVMH did not provide a formal outlook for the remainder of the year.

Overall, LVMH's first half of fiscal 2025 has been challenging, but the company remains optimistic about the future with the support of normalizing demand from key markets and changing consumer preferences.