September 6, 2026
LVMH, the world’s largest luxury goods group, has seen much of the extraordinary stock market gains it accumulated during the pandemic-era luxury boom disappear as weaker consumer demand, geopolitical tensions and economic uncertainty weigh on the sector.
The Paris-listed group, whose portfolio includes Louis Vuitton, Dior and Moët Hennessy, is now valued at around €213 billion, less than half its market value at its 2023 peak. The decline has brought the company’s valuation close to levels seen shortly before the Covid-19 pandemic triggered an unprecedented surge in luxury spending.
The fall in the share price comes despite LVMH remaining substantially more profitable than it was before the pandemic. The group reported €17.8 billion in profit from continuing operations last year, more than 50% above its 2019 level.
The contrast highlights the growing gap between corporate earnings and investor expectations in the luxury sector.
The luxury consumer has changed
The downturn in luxury began several years ago as inflation reduced the purchasing power of middle-class consumers who had increasingly entered the market for premium products.
These so-called aspirational luxury consumers became an important source of growth for major brands during the industry’s boom.
Now many of them are pulling back.
Consultancy Bain estimates that around 60 million consumers, representing approximately 15% of the global luxury customer base, have stopped purchasing luxury goods over the past three years.
Luxury brands may also have contributed to the problem by aggressively increasing prices. According to Bain estimates, prices for many products have risen by roughly 50% to 70% compared with 2019.
For consumers already facing higher housing, food and borrowing costs, luxury handbags, fashion and accessories have become increasingly difficult to justify.
China remains a major problem
China, which helped drive global luxury growth for much of the past decade, has also become a significant source of weakness.
Chinese consumers have become more cautious as the country’s property market has struggled and equity-market performance has remained uncertain.
That matters enormously for companies such as LVMH because Chinese consumers account for a significant share of global luxury demand, both domestically and when travelling overseas.
A sustained recovery in Chinese spending could therefore provide a major boost to the industry. So far, however, the recovery has been uneven.
Not every luxury company is suffering
The downturn has exposed an important difference between luxury brands.
Companies with a particularly wealthy customer base have generally proved more resilient. Hermès and Brunello Cucinelli, for example, have performed better than many competitors because their customers are less dependent on broader middle-class economic conditions.
At the other end of the spectrum, companies already facing strategic or operational challenges have suffered more severely.
Kering, the owner of Gucci, and Burberry have both struggled during the downturn as investors have questioned their ability to restore growth.
Meanwhile, Swiss luxury group Richemont, whose brands include Cartier and Van Cleef & Arpels, has emerged as one of the industry’s strongest performers.
Its shares have risen sharply in recent months, pushing the company’s market value above €100 billion.
Jewellery gains as handbags become more expensive
Changing consumer preferences are also reshaping luxury spending.
As handbag prices have climbed, some shoppers appear to be redirecting their budgets toward jewellery.
LVMH’s jewellery businesses, including Tiffany & Co. and Bulgari, have benefited from relatively strong demand.
The shift reflects a broader question confronting luxury companies: how much can prices rise before customers decide that the product is no longer worth the cost?
For some consumers, spending €10,000 on a piece of jewellery may now appear more attractive than spending a similar amount on a handbag whose price has increased substantially in recent years.
Arnault succession adds another risk
For LVMH investors, the company’s future leadership is another increasingly important issue.
Bernard Arnault, who built LVMH into a global luxury powerhouse and remains its controlling shareholder, is 77.
Arnault has been preparing his five children for potential future leadership roles within the family-controlled business.
Although the succession question has attracted increasing attention from investors, Arnault has indicated that he does not expect the issue to become an immediate priority.
For shareholders, however, the eventual transition will be one of the most consequential moments in LVMH’s history.
The company’s enormous scale and family ownership mean that investors will be closely watching how control and strategic responsibility are eventually transferred.
Is the luxury downturn coming to an end?
There are signs that the worst of the downturn may eventually prove cyclical rather than permanent.
Luxury spending has recently shown signs of improvement in markets such as the United States and South Korea, particularly following stronger performance in local stock markets.
That relationship is important. Luxury purchases are often highly sensitive to consumer confidence and perceived wealth.
When households feel financially secure and investment portfolios rise, consumers may become more willing to spend on discretionary products.
The opposite is also true.
The bigger question for LVMH
LVMH’s challenge is therefore not simply about selling more handbags, watches or jewellery.
The group must navigate a fundamentally different luxury market from the one that existed during the pandemic boom.
The easy growth generated by expanding the aspirational consumer base has faded. China’s contribution has weakened, prices have risen dramatically and geopolitical uncertainty continues to affect consumer confidence.
Yet LVMH still possesses some of the world’s most powerful luxury brands and remains enormously profitable.
The key question for investors is whether the current weakness represents the bottom of a normal luxury cycle — or whether the industry has entered a more permanent period in which consumers are less willing to pay ever-higher prices.
For LVMH, the answer could determine whether its next chapter becomes another period of spectacular growth or a prolonged battle to defend the gains of the luxury boom.
