Freedom: LVMH sales decline heightens concerns for the entire luxury sector

Shares of LVMH and other luxury goods makers fell after the French group’s results disappointed investors. Sales at its key Fashion & Leather Goods division in Q3 declined more than expected. Freedom analyst Natalia Milchakova believes the results heightened fears of worsening performance across the entire sector.

⁠LVMH brings together Louis Vuitton, Dior, Fendi, Bulgari and other brands. The group produces clothing, accessories, jewelry, cosmetics and alcoholic beverages, and also operates retail networks.

Sales at the key division fell 5%

According to the ⁠LVMH report for Q3 and the first nine months of 2026, organic revenue at the Fashion & Leather Goods division in July–September fell 5% year over year. This metric excludes the impact of exchange rates and changes in the business perimeter.

Analysts had expected a decline of about 1.6%, ⁠Oninvest reports. The 5% drop applies to the entire division, which includes Louis Vuitton and other labels, rather than the sales of a single brand.

At the same time, the group’s overall organic revenue rose 1% over the quarter. Watch & Jewelry sales increased 6%, while Selective Retailing, which includes Sephora, added 8%. Thus, weakness in the fashion business was partly offset by other segments.

Disappointment spread to LVMH competitors

In the first hour of trading on October 13, LVMH shares fell 1.8%. Hermès dropped 2.7%, Kering – 1.9%, and Richemont – 2.2%, according to Oninvest.

Milchakova notes that since the start of October, LVMH shares have lost nearly 3%. In her view, investors had already priced in the risk of weak sales, but the actual decline proved noticeably deeper than the consensus forecast.

The reaction spread to other companies, as the market views the results of the largest luxury group as a signal of the state of demand for expensive clothing, footwear and accessories.

Demand in China remains the main risk factor

Milchakova links the deterioration in sales primarily to slowing growth in the Chinese economy. Earlier, expectations of a recovery in demand in China supported interest in luxury companies, but the new results called the durability of that scenario into question.

LVMH itself also said that the Fashion & Leather Goods division in Q3 was hurt by weaker demand in China. At the same time, the U.S. market continued to support its business.

In the analyst’s view, weak Chinese demand matters for the entire sector: it can worsen sales forecasts for several manufacturers at once and limit a rebound in their share prices.

Low valuation has not yet eased concerns

Earlier, Freedom Broker ⁠noted that LVMH’s stock discount does not offset the risks of weak demand. In a piece dated October 5, the group’s shares were valued at about 30% cheaper than Inditex on a price-to-expected earnings basis.

At the time, Milchakova explained investors’ caution by weaker demand in China and other Asian countries. The new report shows that the improvement in LVMH’s overall results is not yet accompanied by a sustained recovery in its key fashion segment.

Not an individual investment recommendation.