What: LVMH reports a 2% revenue decline in Q1 2025, with its fashion and leather goods division down 4%, while maintaining strategic US production amid tariff uncertainties.

Why it is important: The report highlights the evolving nature of luxury retail, where success increasingly depends on strategic geographic positioning, channel optimiSation, and adaptive product strategies.

LVMH's first-quarter performance for 2025 reflects the complex challenges facing the luxury sector, with overall revenues declining 2% to 20.31 billion euros. The fashion and leather goods division, traditionally the group's strongest performer, experienced a 4% decline, though the company maintains a positive outlook on American consumer appetite for luxury goods. Despite geopolitical uncertainties and Trump administration tariffs, LVMH remains committed to its selective US production strategy, currently manufacturing about one-third of its American market needs domestically. The company's resilience is demonstrated through successful product launches, including the sold-out Murakami collaboration and strong performance of new bag designs across the Louis Vuitton and Dior brands. While Asian markets showed significant weakness with an 11% decline, excluding Japan, the company's strategic focus on innovation and market-specific approaches highlights its adaptive response to changing consumer behaviours and market dynamics.

IADS Notes: LVMH's Q1 2025 performance reflects broader transformations in the luxury retail landscape throughout 2024 and early 2025. Geographic market dynamics show a significant shift, with the US market demonstrating resilience through a 1% increase in luxury spending by December 2024, while Asia faced an 11% decline. This regional divergence has prompted strategic product innovations, exemplified by the successful Murakami collaboration and new bag launches. However, the industry's loss of approximately 50 million consumers over two years has forced a fundamental rethinking of product strategies. The digital landscape has also evolved significantly, with online sales stabilising at 20% of market share, though challenges emerged from aggressive e-commerce pricing by players like Amazon. Notably, outlet channels have outperformed traditional full-price retail, indicating a shift in luxury consumption patterns that requires brands to balance accessibility with exclusivity.

LVMH sales dip 2% in Q1