LVMH edges back to growth on China uptick; fortify Q4 vs FX drag
Bottom Line Impact
Modest top-line reacceleration with disciplined FX and commodity hedging can stabilize margins and reinforce LVMH's leadership as creative refreshes convert into sell-through, positioning the group to regain share as China normalizes.
Key Facts
5- Q3 revenue rose 1% to €18.28b, outperforming consensus that expected flat sales
- Fashion & Leather Goods -2% YoY in Q3 vs -9% in Q2, beating a -4% consensus decline
- Mainland China returned to positive growth in Q3; Asia ex-Japan improved nine months into the year
- Management flags Q4 headwinds from FX and macro; expects gradual sequential improvement
- LVMH shares are up 13% since the July 24 trading update, reflecting improved sentiment
Time Horizons
Executive Summary
LVMH delivered its first quarterly growth this year, with Q3 revenue up 1% to €18.28b, as Mainland China turned positive and Asia ex-Japan improved. Momentum remains fragile: fashion and leather goods declined 2% year on year but improved from Q2, while Q4 faces FX headwinds and macro uncertainty, requiring disciplined pricing, hedging, and targeted China activation.
Actionable Insights
Immediate Actions (Next 30-90 days)
Increase Q4 FX hedging coverage on USD and CNY exposures to 70-80% and lock key precious metal hedges for the next 2-3 quarters
Rationale: Management flagged FX headwinds; a 100 bps FX drag on €18b quarterly revenue risks €180m top-line and 30-50 bps EBIT margin pressure without hedges
Role affected:CFO
Urgency level:immediate
Front-load holiday campaigns around new creative directions and capsule drops, with 60-70% of paid media concentrated in China and travel retail corridors
Rationale: Converting creative buzz into sell-through can add 100-150 bps to FLG growth; targeting Mainland, Hainan, and key travel nodes maximizes ROI
Role affected:CMO
Urgency level:immediate
Short-term Actions (6-12 months)
Phase a controlled re-entry of entry-priced icons and leather goods in China while preserving scarcity on flagship SKUs
Rationale: Chinese demand has turned positive but remains price-sensitive; a 3-5% mix shift toward accessible SKUs can lift units and traffic without discounting
Role affected:CEO
Urgency level:short-term
Reallocate 5-10% inventory toward Mainland China and Hainan DFS and tighten buy depth in slower US doors by 5%
Rationale: Aligning stock to demand pockets can lift sell-through by 200-300 bps and reduce markdown exposure into January
Role affected:COO
Urgency level:short-term
Risks & Opportunities
Primary Risks
- FX volatility in Q4 compresses reported growth and margins despite stable underlying demand
- China recovery stalls due to real estate stress and consumer confidence setbacks
- Precious metal inflation elevates jewelry COGS, pressuring margin if not hedged
Primary Opportunities
- Creative resets at Dior, Celine, Loewe, and Fendi catalyze demand and traffic in H1-H2
- Sephora omnichannel strength offsets softness in FLG and drives cross-category acquisition
- Targeted entry-priced icons in China expand volume without brand dilution