Just when the luxury industry appeared to be finding its feet again, the latest numbers from LVMH have raised fresh questions about how soon a recovery can take hold.The French luxury group, which owns Louis Vuitton, Dior and Tiffany & Co., reported a 5% fall in organic sales at its fashion and leather goods division in the third quarter of 2026. The decline, driven in part by weaker demand in China, came just a quarter after the business returned to growth following nearly two years of declines.The results are a setback for the world’s largest luxury goods group and a warning sign for an industry that has been struggling to regain momentum. While shoppers in the US, Europe and Japan continued to support sales, demand in China remained weak.
China slowdown puts luxury recovery in doubt
According to a report by Financial Times, LVMH said its fashion and leather goods business continued to benefit from the “buoyant US market but was affected in the third quarter by the slowdown in demand in China”.The division, which includes Louis Vuitton and Dior, generated €8.25 billion in revenue during the quarter, down from €8.50 billion a year earlier. Its 5% organic sales decline was also steeper than analysts had expected. Organic growth figures exclude the effects of currency movements and changes in the group’s business portfolio.The slowdown comes amid continued pressure on Chinese consumer spending. Concerns over the country’s property market and the wider economic outlook have weighed on confidence, particularly among shoppers who aspire to buy luxury goods but are more sensitive to rising prices and financial uncertainty.Geopolitical tensions and inflationary pressures have added to the uncertainty, making it harder for luxury brands to count on a quick rebound in demand.LVMH chief financial officer Cécile Cabanis said the changing economic backdrop in China was delaying the recovery rather than ruling it out.“What we’ve been seeing this quarter in terms of macro news and change in backdrop for Chinese consumers is delaying the recovery a bit, but there’s nothing structural or specific that would impair the recovery,” she said. “It’s just going to take a bit more time.”
Louis Vuitton faces pressure in China
The performance of Louis Vuitton, one of LVMH’s most important brands, has come under particular scrutiny.The label faced criticism in China following a trademark dispute with Molly Tea, a popular Chinese tea chain. Louis Vuitton’s claim over a four-petal flower design drew backlash online, with critics arguing that the motif resembled traditional Chinese designs. The controversy added to the challenges facing the brand in a market where consumer sentiment was already weakening.Cabanis also pointed to a one-off logistics issue that affected Louis Vuitton’s performance during the quarter, reducing growth by around one percentage point.Dior, meanwhile, offered a more encouraging picture. LVMH said the brand was seeing particularly strong demand for ready-to-wear and leather goods designed by Jonathan Anderson. Its sales remained positive for the year to date, according to the company.
Sephora and jewellery help support group sales
While fashion and leather goods struggled, other parts of LVMH’s business held up better.The group reported total third-quarter revenue of €18.5 billion, representing 1% organic growth from a year earlier. That was slightly below the 1.3% growth analysts had expected.Its selective retailing division, which includes beauty retailer Sephora, recorded 8% organic growth. Watches and jewellery also grew by 6%, while wines and spirits rose by the same amount. Perfumes and cosmetics posted a smaller 1% increase.The figures underline how uneven the luxury market has become. Demand for jewellery and beauty products has provided some support, but it has not been enough to offset the weakness in fashion and leather goods.
What does this mean for the luxury industry?
LVMH’s results are being closely watched because the group’s performance often offers an early indication of how the wider luxury market is faring. Its latest figures arrive as investors look for signs that the prolonged slowdown is nearing its end.The outlook remains uncertain. Although US sales rose 5% organically in the third quarter, the pace of growth eased from 6% in the previous quarter. Sales in Asia excluding Japan fell 5%, highlighting the continued pressure from the region.Investors have also become more cautious about the sector’s growth prospects. LVMH shares had lost around 40% of their value over the course of 2026 by the time of the latest results, reflecting concerns about the group’s ability to regain momentum.For now, LVMH is relying on its range of brands and businesses to weather the slowdown. But with its core fashion division back in decline, the latest results suggest that a broad recovery in luxury spending may take longer than many had hoped.
