LVMH’s stock is slowly moving higher after losing about a third of its value over the last six months. The company reported sales of 39.8 billion euros in the first half of 2025, down 4 percent. Net profit fell 22 percent to 5.7 billion euros. These numbers do not show a strong recovery yet but suggest the company is working to stop further decline. Some investors believe the bottom may have passed.
The problems are mostly in certain markets. Louis Vuitton’s sales in Japan dropped 28 percent. Fashion and leather goods, which make up nearly 80 percent of profits, declined 9 percent in the second quarter. Wines and spirits sales also fell 4 percent with weaker demand for Cognac and flat growth in Champagne. Asia remains soft. China’s luxury market shrank 11 percent early this year and looks like it will shrink again soon. The United States market dipped 3 percent while Europe managed a small gain of 4 percent. Japan’s sales jumped 57 percent thanks to Chinese tourists taking advantage of the weak yen.
Margins have decreased but remain solid. Operating margin dropped to 22.6 percent from 25.8 percent last year. Free cash flow increased 29 percent reaching 4 billion euros. Debt levels look manageable with net debt to equity at 0.58 and current ratio at 1.38. The Arnault family recently purchased shares worth 1.1 billion euros which shows strong confidence.
LVMH’s valuation is low compared to history. The price to earnings ratio stands at 18.76, about 30 percent below its ten year average and 20 percent below its three year average. Morningstar lowered its fair value estimate slightly but still sees roughly 19 percent upside. Hermes has overtaken LVMH in market cap trading with a forward multiple more than twice as high at 50.8 compared to LVMH’s 20.2.
Luxury buyers have not disappeared. They are holding back for now. Chandler Mount says the small revenue drop reflects hesitation among wealthy consumers not product issues. Tariffs and uncertainty keep shoppers cautious.
LVMH remains strong in key areas. Louis Vuitton’s operating margin stays near 35 percent. Sephora keeps growing and Dior is expanding. New flagship stores are opening in Shanghai and Tokyo. With seventy five brands, the group remains diversified and stable adjusting to current conditions without major shifts.
The outlook depends on markets settling down. If China stabilizes and U.S. spending picks up growth could return. Past downturns offer perspective. After 2008, LVMH’s stock rose over 200 percent in two years. Following the pandemic recovery took eighteen months. What is happening now feels more like a pause than a collapse.