LVMH Ready to Launch Mitigation Strategies if Tariff Talks Fail

Luxury goods retailer LVMH Moët Hennessy Louis Vuitton said it is prepared to increase prices on its products and take other mitigation strategies if negotiations over tariffs during the 90-day suspension are unproductive.

“We all need to stay very calm because we are in unknown territories,” LVMH Chief Financial Officer Cécile Cabanis said during a conference call with analysts discussing the firm’s first-quarter earnings on Monday (April 14). “This is not under our control.”

But what the Paris-based retailer can do is launch a mitigation strategy of which “price increase is one part” — and pass along the costs to consumers.

Under President Trump’s revised tariffs, China has a 125% tariff while the rest of the world saw a 10% levy imposed on goods.

China is one of LVMH’s largest markets. It is the biggest component of sales for its Asian business, excluding Japan. This cohort comprises 30% of LVMH’s total revenue in the first quarter.

Second is the U.S., where LVMH sales are 25% of total revenue. Europe, excluding France, is third at 15%, Japan comes in at 9%, France at 8% and other markets comprise 14%.

Cabanis said the firm’s luxury goods have more pricing power, since well-heeled customers are not budget conscious. However, stock market declines have collectively wiped out trillions in net worth, which impacts overall demand.

LVMH also owns non-luxury retail stores such as Sephora where customers could be more sensitive to price. It also owns wine and spirits brands.

The CFO said LVMH is considering other mitigation strategies, such as stepping up LVMH’s manufacturing in the U.S.

Cabanis said LVMH has three manufacturing facilities in the U.S. that currently serves around a third of U.S. demand. LVMH also owns high-end jewelry retailer Tiffany & Co., and most of its products are made in the U.S. to meet Americans’ demand, she said.

While there is some capacity to increase U.S. production, “it’s not something we can do overnight, Cabanis said. “It takes quite some time to prepare, but it’s something we can contemplate in a reasonable framework and time frame.” She said it takes time to recruit and train experienced skilled workers.

For now, LVMH will focus on managing through current macroeconomic uncertainties and putting together mitigation plans while closely monitoring demand across geographies, Cabanis said.

“We are not today contemplating to change radically,” the CFO said.

One of the EU’s most valuable companies by market cap, LVMH shares, which are listed on the Euronext Paris Eurolist, were up 1.1% to 530.10 euros ($601.78) on Monday. The retailer reported earnings after the bell.

Read more: Sephora, Retail Division Drive LVMH’s Q4 Performance Amid Luxury Market Headwinds

Q1 Demand Weakens, Except for Europe

LVMH reported a 2% drop in revenue to 20.3 billion euros ($23 billion) in the first quarter of 2025 year over year as fashion and leather goods, which comprise half of total revenue, declined by 4%. There was a 1 percentage point positive gain due to favorable currency exchange.

Fashion and leather goods, with brands including the flagship Louis Vuitton along with Christian Dior, Givenchy, Fendi and others, reported the second largest revenue drop in the quarter after wines and spirits, which fell 8%.

Consensus revenue estimate came to 21.1 billion euros ($24 billion).

U.S. sales fell 3% in the quarter year over year. However, separating out the fashion and leather goods, and watches and jewelry groups, U.S. demand “remained well-oriented and accelerated modestly when compared to the second half of last year.”

Asia, excluding Japan, saw sales plunge 11% in Q1. Cabanis said sales trends in China were “consistent” with those at the end of 2024. Japan was down 1% due to strong comparables in 2024 but Europe gained 2%.