A 5% drop in quarterly sales may not derail LVMH’s annual revenue, but for a luxury bellwether like this, stagnation in its fashion and accessories division signals broader industry challenges. LVMH, known for its resilience during economic downturns and consistent outperformance, now faces headwinds beyond mere sales numbers.
Historically, LVMH has defied industry trends, driving growth through strategic price hikes, market expansion, and creating coveted niches. Yet, even the major marketing push during last summer’s Olympics, where LVMH brands were highly visible, hasn’t delivered the anticipated sales surge. While it’s premature to declare “Louis Vuitton fatigue,” there’s a growing disconnect between luxury offerings and consumer demand. Inflation, rising living costs, and a perceived lack of innovation are prompting consumers to reconsider their luxury purchases.
Over the past five years, the price of luxury handbags and accessories has nearly doubled, widening the gap between aspiration and affordability. Loyal LVMH customers face a dilemma: if they already own a selection of bags, does a new Celine purchase justify splurging on another Dior, Fendi, or Louis Vuitton? The era of closets filled with luxury handbags seems increasingly out of touch, especially with the rise of the resale market offering similar styles at lower prices.
China, once a key growth market for luxury brands, is also showing signs of strain. Chinese consumers are grappling with economic pressures, such as mortgage payments in a weakening housing market, leaving little room for discretionary luxury spending. Moreover, price disparities between Europe and China have boosted the grey market, with apps like DeWu offering discounted luxury goods through unofficial channels. (1)