Report: LVMH Tells Analysts Demand Remains Weak in Luxury Sector

Luxury conglomerate LVMH reportedly told investors and analysts that demand remains soft due to weaker consumer confidence in China and other markets.

This message may signal that the company’s second-quarter results may not show an improvement over the first quarter, when LVMH missed revenue estimates, Bloomberg reported Wednesday (May 21), citing unnamed sources.

LVMH did not immediately reply to PYMNTS’ request for comment.

The luxury market has been challenged by Chinese shoppers cutting back on large purchases and by the U.S. imposing new tariffs, according to the report.

Preliminary analyst estimates expect LVMH’s fashion and leather goods unit, which generates most of the company’s profits, to see its revenue fall 3.7% in the second quarter, per the report.

When reporting its first-quarter results on April 14, LVMH said it saw a 2% drop in revenue year over year as fashion and leather goods declined by 4%. There was a 1 percentage point positive gain due to favorable currency exchange.

The company said at the time that it would focus on managing through current macroeconomic uncertainties and putting together mitigation plans while closely monitoring demand across geographies.

“We are not today contemplating to change radically,” LVMH Chief Financial Officer Cécile Cabanis said during the company’s quarterly earnings call.

The luxury market has been undergoing a period of mixed results and shifting dynamics, with high-income consumers remaining a critical source of demand but becoming more price-conscious and seeking greater value and quality in their luxury purchases, PYMNTS reported in February.

It was reported Friday (May 16) that luxury group Richemont will continue to limit its price increases, even in the face of new U.S. tariffs, and that it has benefited from being more restrained in its price increases than some of its rivals over the past four years.

Some of Richemont’s rivals in the luxury sector have seen a customer backlash over prices after announcing prices increases in the U.S. to offset the effect of tariffs and making double-digit price increases over the past five years.

LVMH said during its April 14 earnings call that it was prepared to increase prices on its products and takeother mitigation strategies if tariff talks fail.