At the end of 2022, its market value soared so high that Bernard Arnault, the founder and chairman controlling nearly half of the company’s shares, became the richest person in the world. But since then, its stock has taken a steep fall.
LVMH — the powerhouse behind 75 brands including Louis Vuitton, Dior, Bulgari, and Tiffany & Co. — is facing a slowdown after the post-COVID boom.
According to a semi-annual report released on July 24, 2025, revenue fell by 4% compared to the same six-month period in 2024, while recurring operating profit plunged 15% to US$ 10.5 billion.
Wine, spirits, fashion, and leather goods all saw declines, while watches, jewelry, perfumes, and cosmetics remained steady.
LVMH insists it is showing resilience and maintaining strong innovation momentum despite turbulent geopolitical and economic conditions. Demand remains solid in Europe and stable in the U.S.
Luxury's Price Hike and Overstock Problem
LVMH is not alone in this turmoil. Paris-based Kering, owner of Gucci, Bottega Veneta, and Yves Saint Laurent, also reported significant sales drops in the first half of this year.
"Luxury is in a death spiral," predicted Katharine K. Zarrella in a New York Times guest essay in December 2024.
She added, "After a decade of almost unchecked growth, the sector is now crashing globally. Analysts point to overstretched buyers cutting back and weakening demand in China."
Geopolitical tensions, currency fluctuations, and looming tariff threats are rattling consumers and could soon disrupt supply chains.
Zarrella, a veteran fashion editor, noted worrying signs everywhere: soaring prices, declining quality, and an increasing flood of luxury goods being offloaded at discount outlets.
"Brands that once prided themselves on craftsmanship, service, and cultivating a discerning, loyal clientele have now become mass marketing machines as elegant and exclusive as the M&M’s store in Times Square," she wrote.
The Tariff Time Bomb
Adding fuel to the fire, tariffs imposed by the Trump administration include 15% on European goods and a staggering 39% on Swiss products, potentially hitting the crucial U.S. luxury market.
Most luxury items are crafted in France or Italy, while many high-end watches hail from Switzerland. With trade talks uncertain, companies and consumers alike are holding back.
Chinese buyers — once the lifeblood of luxury spending — remain cautious amid geopolitical instability. Previously, about 40% of luxury purchases were made domestically in China, but as travel returns, roughly 75% are now bought at home.
However, with China’s economy slowing, many aspirational buyers have left the market, and those remaining are less eager to splurge on luxury goods.
According to Wouters, to retain the remaining Chinese clientele, luxury brands must refocus on their core customers, enhance their shopping experience, and ensure that rising prices genuinely reflect superior quality.