LVMH’s second-quarter earnings showed a return to growth, but fashion remained weak.
Jewellery remains luxury’s strongest category, while fashion depends more on fresh designs and tourist spending.
Investors should track brand heat, margins and full-price demand, not treat luxury as one trade.
After two difficult years for luxury, LVMH’s second-quarter results offered the first clear sign that conditions may be stabilising. Sales improved and the group’s crucial fashion business returned to growth, but only narrowly. For investors, the message is less “luxury is back” and more “the recovery has started, but customers are still choosing carefully”.
Fashion and leather goods produces roughly half of LVMH’s revenue and more than two-thirds of its profit from normal operations. A small change here matters more than a larger gain elsewhere.
Sales improved with stronger demand in the United States, better trends in Asia and early interest in Jonathan Anderson’s first Dior designs. Europe was flat, partly because conflict in the Middle East reduced tourist spending. LVMH said group growth would have been about one percentage point stronger without that disruption.
The market still wanted more. Fashion growth came in slightly below Bloomberg expectations, while profit in the division fell during the first half. Currency movements played a role, but the wider lesson is simple: when a highly profitable business slows, modest cost pressure can make profits fall faster than sales.
This was not a bad quarter. It moved from weak to less weak. Markets are rarely famous for applauding that distinction.
The strongest signal came from watches and jewellery, where LVMH posted double-digit organic growth. Tiffany and Bulgari benefited from established collections. Richemont recently reported even faster growth at Cartier, Van Cleef & Arpels and its other jewellery houses.
Jewellery is currently outperforming fashion, while wines and spirits also delivered a strong recovery. Beauty and accessories were more uneven. Part of jewellery’s strength may be emotional. A ring or bracelet often marks a wedding, anniversary or personal milestone, giving the purchase a lasting purpose. A seasonal handbag faces a tougher test: it must compete with last year’s collection and, in many wardrobes, with a cupboard that is already quite full.
For the sector, this creates a wide gap between winners and laggards. A famous name attracts attention. It cannot force customers to like the new collection.
LVMH has refreshed creative leadership across several fashion houses. Dior’s early response is encouraging, but creative change works slowly. Designs must reach stores, attract customers, sell at full price and remain desirable after the launch campaign ends.
Investors can follow three stages: attention, conversion and durability. Store traffic and online interest come first. Sales come next. The real test is whether demand survives beyond one popular bag or runway show.
LVMH also highlighted strong new stores in Beijing and Seoul, while Sephora continued to gain ground. In luxury, the shop is part of what the customer believes they are buying.
Geopolitical disruption may continue to restrict travel and tourist spending, especially in Europe. China’s improvement may also prove uneven, leaving growth dependent on easier comparisons rather than broad demand.
Execution is the third risk. New designers can revive a brand, but they can also produce expensive applause without enough sales. Warning signs include rising inventories, more discounting, weaker margins and growth concentrated in one product.
Separate categories. Fashion, jewellery, beauty and spirits can behave differently in the same economy.
Compare sales with margins, the share of revenue retained as operating profit. Full-price growth carries more weight than promotions.
Test the recovery’s quality. Look for local customers, broad product strength and repeat demand.
Diversify across brands and regions. Luxury sales still rise and fall with the economy, even when the handbags are timeless.
Luxury companies sell dreams, but LVMH’s quarter shows that dreams recover at different speeds. Jewellery is moving quickly, fashion is taking smaller steps, and tourist-dependent markets remain vulnerable to events far beyond the boutique. The useful signal is not that luxury has fully recovered, or that the slowdown is over.
Customers are becoming more selective, which makes execution more important than sector labels. LVMH has turned back towards growth, but the next test is harder: proving that new creativity can produce durable demand without weakening margins. In luxury, the logo opens the door. The product still has to close the sale.
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