LVMH Q1 2026: Fashion Fails to Restart – Only the Rich Save Luxury

We have reached a week that many fashion insiders had been waiting for. In these days, in fact, the major powers of the fashion world will publish their half-year results, providing an initial picture of the state of luxury at the beginning of a year that has been anything but simple. The first to report was LVMH, considered the barometer of the sector, which in the first quarter of the year saw revenues fall by 6% compared to last year, on a constant currency basis, from €20.311 billion to €19.121 billion, but recorded 1% organic growth overall, demonstrating the resilience of the mega-group, although not driven by fashion.

According to the group’s documents, before the outbreak of war in the Middle East, the region was performing well, but the damage caused by the conflict has been relatively limited because the entire area accounts for only 6% of LVMH’s revenue, even though the sharp decline impacted these early-year results. The second quarter should provide a clearer picture of the damage done. The crisis in the region ultimately ended up affecting the results of the fashion division, which, among all group divisions, is the one that struggles the most to stay afloat. But why?

Fashion struggles, the rest does not

The Fashion & Leather Goods division, which alone represents 48% of LVMH’s revenue, recorded sales of €9.247 billion, down 9% as reported and 2% on an organic basis. The result was mainly penalized by the impact of the Middle Eastern conflict. What stands out, however, is that this time the group did not explicitly disclose the growth (or decline) figures for Louis Vuitton and Dior. But considering that fashion sales fell by 2% organically, it can be assumed that the division has remained largely stagnant.

To understand why growth is effectively absent, one must look at the other divisions, typically more “commercial”: the perfumes and cosmetics division remained flat on an organic basis, generating just over €2 billion; while the division dedicated to jewelry and watches grew organically by 7%. Among the standout brands of the period were Tiffany & Co., Bvlgari, Chaumet, and various watch brands. Now, this category is significantly more expensive than perfumes, suggesting that the aspirational customer segment that fueled the latter’s sales has shrunk, while wealthier clients are favoring jewelry over ready-to-wear.

In practice, even perfumes and cosmetics have become more expensive and it is difficult to push them further upmarket, whether due to sheer sales volume or because the ultra-luxury perfume market is already saturated with independent players. This means that somewhere, customers are being lost or at least not being replaced by new ones. The issue of pricing certainly plays a role, albeit indirectly. However, the growth that was recorded was driven by sectors where discretionary spending is easier: alcoholic beverages and retail.

The success of small luxuries

The divide in the customer base also indirectly emerges in the often “troubled” Wines & Spirits division, which is usually the weakest, but has now recovered, growing organically by 5%. This is again a category in recovery, although the momentum is partly due to Moët & Chandon becoming the official champagne of Formula 1, effectively gaining access to a broad market, and Chinese New Year revitalizing Hennessy’s sales. It is also interesting to note how the recovery in cognac sales is linked to a period in which, in China and neighboring countries, people exchange gifts that, until recently, were fashion accessories worth thousands of euros.

In retail, which grew organically by 4%, the real standout appears to have been Sephora, while DFS duty-free stores were sold or licensed without significant growth, and Le Bon Marché maintained its prestige but did not exactly generate major profits. Sephora’s growth, like that of champagne and the brand TAG Heuer, was partially linked to partnerships with Formula 1, just as other individual brands grew thanks to partnerships such as Dior with UNESCO or Chaumet with WWF, as well as sponsorships particularly tied to Formula 1 or the Snow League in Aspen.

Healthy, but not dazzling

A model that appears functional, but which may suggest a certain disconnect from actual sales, which in the overall group results have not exactly surged. Strong currency fluctuations have eroded the growth that did occur; without them, results would have been better. The positive aspect is that Asia appears to be recovering, with organic growth of 7% excluding Japan, which instead declined by 3%, while the United States is also rebounding. Today, continental Asia (and therefore China) accounts for 32% of revenues and the U.S. for 23%, making them by far the most important markets. Encouraging signs for the future.

The same cannot be said for Europe overall, where there has been a 3% decline, except in France, which alone represents about 7% of total revenues, demonstrating strong domestic demand, albeit slightly down. Overall, however, the key to this resilience has been diversification, both across different business segments, which balance each other, and across key markets.

It can therefore be said that the group has solid anchors, but the “engine” of sales needs to restart in order to achieve growth. It seems clear that the key fashion and leather goods division has reached a structural ceiling beyond which further expansion is difficult. Potential investments in the more premium segment cannot be ruled out in the future, although adding brands to the portfolio would represent a significant strategic shift if the brand in question were not a luxury one. It may be prudent for the group to begin moving toward more profitable territories beyond traditional luxury, now dominated by the ever-growing ultra-luxury segment.