LVMH Soars After Surprise Return To Growth, Signaling Possible End Of Luxury Downturn

Shares of LVMH Moët Hennessy Louis Vuitton SE in Paris jumped the most since the dot-com era after the world’s largest luxury group unexpectedly returned to sales growth in the third quarter, signaling a potential end to the multi-year luxury downturn that had halved the stock.

Third-quarter results showed organic revenue growth of 1%, marking a return to expansion after two consecutive quarters of decline. The rebound was broad-based, led by Selective Retailing and Wines & Spirits, signaling early signs of stabilization in global luxury demand. While Fashion & Leather Goods remained in contraction, the pace of decline narrowed significantly from previous quarters, suggesting momentum is starting to turn and a bottom could be in. 

LVMH Q3 Earnings Snapshot (courtesy of Bloomberg):

• Organic revenue: +1% (beat est. -0.7%), marking a return to growth after two quarters of decline.

• Total revenue: €18.28B (-4.2% y/y), slightly above estimates (€18.17B).

By Division (organic growth vs. estimates):

• Fashion & Leather Goods: -2% (better than -3.5%)

• Wines & Spirits: +1% (beat -3.2%)

• Perfumes & Cosmetics: +2% (in line)

• Watches & Jewelry: +2% (beat +1%)

• Selective Retailing (Sephora, DFS): +7% (beat +4.6%)

By Region (organic growth vs. estimates):

• U.S.: +3% (beat +1.9%)

• Asia ex-Japan: +2% (beat -3.6%)

• Japan: -13% (missed -4%)

• Europe: -2% (missed +1.5%)

“The desk is also busy in Consumer Discretionary. There has been a decent uptick in activity in Luxury following LVMH figures with two-way better buy flow in the name, though the desk did find supply in the broader luxury space namely with Richemont and Ferrari,” UBS analyst Eva Kindt told clients earlier. 

In a separate note, the UBS analyst Pilar Rocafort noted, “Despite the strong share price performance in the last month (up 9%), which raised expectations into LVMH’s Q3 print, UBS analyst Zuzanna Pusz believes the much better growth of the overall group should be taken well by the market. Especially the largest Fashion & Leather Group division’s organic sales growth (OSG), at a 2% decline, came in better than expected (as per Zuzanna’s conversations with investors the buy-side was looking for a 3% or 4% decline), with OSG improving sequentially ahead of the comparable basis. Shares in LVMH jumped 12% at the open on Wednesday, per Reuters.” 

RBC Capital Markets analyst Piral Dadhania said, ”We view these results as a step in the right direction.” 

Shares in Paris jumped as much as 14%, marking the largest intraday increase since the 16.9% surge on September 24, 2001.

Shares are retracing after being halved since the 2023 peak when the luxury downturn first unfolded. 

LVMH is a bellwether for the luxury industry, providing tailwinds for luxury and consumer stocks today, with Gucci-owner Kering SA and Hermes International rising in Paris. 

Oddo analyst Jean Danjou told clients, ”The return to positive growth for the group as a whole in Q3 suggests an improvement in its relative position compared to the rest of the sector.” 

“The pace of recovery, stemming from all regions, is encouraging and bodes well for a return to growth next year and beyond,” JPMorgan analysts said. 

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Could the luxury downturn be in the early stages of bottoming, if not reversing?