Louis Vuitton store window display in Mitsukoshi department store in Tokyo, Japan, on Friday, April 4, 2025.
Bloomberg | Getty Images
Luxury conglomerate LVMH reported better-than-expected earnings after the bell on Tuesday and a second quarter of organic revenue growth, as the sector’s recovering business in China starts to show up in balance sheets.
Organic revenue grew by 1% in the fourth quarter, flat from the same period a year earlier. Over the full year, revenue decline 1%.
The company reported fourth-quarter revenue of 22.7 billion euros, beating LSEG estimates of 22.2 billion euros. For the full year, revenue came to 80.8 billion euros.
Excluding Japan, Asia saw a noticeable improvement in trends compared to 2024, with a return to growth in the second half of the year, the company said.
In October, LVMH shares surged 12% the day after it reported that organic growth re-entered positive territory in the third quarter. The results, alongside those of peers, ignited investors’ optimism that the gloom around luxury over the past two years, as Chinese consumers spent less, was beginning to turn around.
“After the reassuring Q3, market expectations have probably been raised higher for Q4,” wrote Barclays analyst Carole Madjo ahead of LVMH’s report.
Madjo expects 2026 to continue to deliver recovery for the luxury space, with about 5-6% growth across the sector at constant currencies.
The U.S. should remain the main growth driver, while China continues to stabilize, Madjo said. However, “while investor sentiment is turning more positive on the sector, we remind that some risks remain as valuation is now more demanding; EPS upgrades are yet to come, and the return of aspirational shoppers is not guaranteed,” she added.
After booming in the early days of the Covid-19 pandemic, luxury brands diverged. Some, like LVMH and Gucci-owner Kering, which rely heavily on their fashion & leather divisions, suffered. But those that were more exposed to higher-end luxury, like jewellery, and typically attracted wealthier shoppers, fared better.
This earnings season, the world’s second biggest luxury company Richemont, the owner of Cartier and Van Cleef, reported an expectations-beating December quarter with sales in reported currencies rising 4% year-on-year. The result was driven by strong demand for its luxury jewellery in what Bernstein analysts call “long-term structural appeal.”
Meanwhile, Burberry also beat sales growth expectations for the previous quarter, which CEO Joshua Schulman partly attributed to successfully attracting Gen Z consumers in China, where it has concentrated marketing efforts.
“The Chinese consumer may be showing positive signs, but as [Richemont’s] quarter’s sequential deceleration (albeit in the face of tough comps) in China highlight, the path to recovery remains unsteady,” said Bernstein analyst Luca Solca.
“Luxury brands may no longer rely on a steady stream of newly minted luxury consumers to drive growth in the region, and must bridge a K-shaped economy elsewhere.”
