LVMH, the luxury conglomerate based in Paris, announced a revenue of €20.3 billion ($23 billion) in the first quarter of 2025, reflecting a 3% decrease compared to the same period last year. This result fell short of the 2% growth anticipated by VisibleAlpha consensus forecasts.
In alignment with previous quarters, the company’s wine and spirits division, which includes brands like Moët & Chandon and Veuve Clicquot, showed the largest decline, with a 9% decrease year-over-year. The watches and jewelry segment, featuring brands such as Tag Heuer and Bulgari, remained stable with no change in organic terms for the quarter.
A significant concern among global companies has been the implementation of tariffs, which became a comprehensive policy earlier in April before President Donald Trump eased them. During LVMH’s earnings call, the company highlighted that despite uncertainties stemming from tariffs, American demand remained robust in the first quarter.
Cecile Cabanis, LVMH’s Chief Financial Officer, emphasized the importance of staying focused during downturn cycles and highlighted the need to demonstrate agility and the ability to adapt. She noted that the impact of tariffs had not been significant yet, although she acknowledged that the "aspirational clientele is always more vulnerable in less positive economic cycles."
Bernard Arnault, Chairman and CEO of LVMH, had previously minimized the potential negative impact of tariffs on the company, describing the U.S. as "welcoming." Arnault, who attended President Trump’s inauguration ceremony earlier this year, expressed serious consideration for increasing the availability of the group’s luxury goods in the United States.
Arnault remarked that American authorities were encouraging the expansion of LVMH’s presence in the U.S., and in light of recent developments, this was being seriously considered. LVMH employs 40,000 people across three Louis Vuitton factories, and Cabanis stated that most of the company’s U.S. products are intended for the American market, which offers some leeway in case tariffs are imposed.
The French conglomerate, which owns over 75 brands, has faced challenges in recovering from a slowdown in luxury goods demand. In 2024, LVMH’s sales dropped by 2% to $88 billion, although there was a 1% gain in fourth-quarter revenues. However, there are signs of recovery, with strong consumer demand in Japan and the U.S., comprising 9% and 25% of LVMH’s sales, respectively.
LVMH’s quarterly results are the first from a major luxury group, setting a precedent for what others in the sector may face. Since the beginning of 2025, the company’s shares have declined by 17%, and Arnault’s net worth has decreased by $15 billion.
Despite enduring challenging years, the luxury market had hoped for improvement this year, as inflation and interest rate peaks appeared to have passed. This was supposed to benefit European companies, whose shares have dropped 8.5% year-to-date.
American consumers were anticipated to revive the sector’s performance by late 2025 or 2026, as highlighted by Gemma D’Auria from McKinsey’s luxury division in a January report. However, the announcement of new tariffs by President Trump has cast doubt on this recovery.
Luca Solca, an analyst from Bernstein SG, noted that American luxury spending could have compensated for projected weaknesses in Chinese and European demand, but the recent U.S. import tariffs averaging around 23% (even after President Trump’s recent reductions) complicate this expectation.
The volatility could significantly impact LVMH, which is among the most exposed companies to the U.S. market. Luxury goods, produced in France and Italy, alongside Swiss-made high-end watches, now face a 10% tariff—lower than initially proposed but still higher than prior rates.
Analysts express concern over the potential impact of tariffs on consumer sentiment, particularly if luxury brands pass on additional costs to shoppers. A potential recession could also deter consumers from spending substantial amounts on luxury items.
Solca explained to Fortune that recessions negatively affect the luxury sector, as they dampen the consumer experience, which is integral to luxury spending. LVMH is viewed as a key representation of the industry and could face significant challenges during economic downturns.
HSBC has revised its forecast for organic luxury sales, now expecting them to remain flat this year, a decrease from previous predictions of a 5% year-over-year increase, according to a report by the Financial Times.
