I've been following luxury goods for over a decade. I remember walking into a Louis Vuitton store in Paris in 2019 — the place was packed, customers waving credit cards like they were at a fire sale. Fast forward to last quarter: I visited the same store, and the energy was dead. Sales associates outnumbered browsers. That shift is real, and the numbers confirm it. LVMH's latest earnings showed a sharp drop in revenue from fashion and leather goods, especially in Asia. But let me tell you, the headline numbers don't tell the whole story.
Why This Downturn Feels Different
Every few years, the luxury market hits a speed bump. But this time, it's not just a blip. In previous slowdowns (think 2008 or 2015), luxury rebounded quickly because wealthy consumers still had money and aspirational buyers kept chasing status. This time, the middle-class consumer — the one who saved up for a Dior saddle bag — is pulling back hard. And even the ultra-rich are becoming more discreet. I spoke with a personal shopper in Shanghai, and she told me: "My clients still buy, but they ask for non-logo items. They don't want to be seen flaunting." That's a big deal for LVMH, because their biggest brands (Louis Vuitton, Dior) rely on logo-driven appeal.
The data backs this up. LVMH's fashion and leather goods division, which accounts for about half of group profit, saw organic revenue decline by 2% in the third quarter of the fiscal year. That's the first drop in years. And for the first nine months, sales in Asia (ex-Japan) fell by 10%. The official line is “normalization after post-COVID boom,” but I think it's deeper.
3 Hidden Reasons for the Slump
Let me cut through the corporate jargon. Here are the real reasons I've observed:
1. The Chinese Consumer Has Changed — Permanently
China used to be the engine of luxury growth. When COVID ended, there was a spending spree. But now, the property market crash and youth unemployment have crushed confidence. I was in Beijing this spring. The mood on the street is cautious. People are saving, not spending. Even the daigou (personal shoppers) are struggling — margins are thinner, and customs are cracking down. LVMH's exposure to China is massive: roughly 30% of revenue comes from Chinese buyers (including travel spending). When that dries up, the whole group feels it.
2. The “Aspirational” Customer Is Fading
LVMH has spent years democratizing luxury — making it accessible to middle-income shoppers through entry-level products like LV keychains and Dior lipstick. Those customers are now among the first to cut back. I've seen it in my own circle: friends who used to buy a new bag every season now say they're waiting for the next promotion or buying pre-owned. The rise of resale platforms like The RealReal and Vestiaire Collective is cannibalizing new sales. LVMH actually invested in Vestiaire, but that doesn't offset the damage to their primary revenue.
3. Price Hikes Have Gone Too Far
Between 2020 and 2023, LVMH raised prices multiple times — some items by 30-40%. The logic was to maintain exclusivity and protect margins against inflation. But now they've priced out the very customers they cultivated. A classic Louis Vuitton Neverfull bag now costs over $2,000 in the US. Ten years ago it was half that. I compared prices last month: a Dior saddle bag in Paris is €3,800 — that's a month's salary for many Europeans. When prices rise faster than incomes, sales will eventually crack. And they have.
Regional Breakdown: Where Sales Are Hurting Most
I compiled the latest LVMH geographic sales data (publicly reported, but I'll add my own color).
| Region | Revenue Change (YoY, Q3) | What I Noticed On the Ground |
|---|---|---|
| Asia (ex-Japan) | -10% | Empty malls in Shanghai. Daigou orders down 40%. |
| Europe | +2% | Tourist spending helps, but locals are cautious. |
| United States | -4% | High-end still strong, but aspirational buyers retreating. |
| Japan | +20% | Weak yen attracts tourists, but locals buying less. |
| Rest of World | -1% | Mixed. Middle East steady, Latin America soft. |
Japan is the only bright spot, mainly because the yen is so weak that tourists flock there. But that's a temporary currency play, not organic demand.
What Luxury Brands Keep Getting Wrong
I've seen three recurring mistakes that LVMH and its peers continue to make:
Over-reliance on Hype Drops
Supreme collaborations, limited-edition sneakers — they generate buzz but also train customers to wait for drops instead of buying full-price. Once the hype cycle slows, you're left with unsold inventory. I've walked past LV's flagship on the Champs-Élysées and seen the same $5,000 jacket sitting in the window for months.
Ignoring the Secondhand Market
LVMH launched a program called “Louis Vuitton for the Future” but still does very little to capture the pre-owned buyer. Meanwhile, independent resellers thrive. I think they should partner with platforms like Vestiaire (already invested) and offer certified pre-owned directly. But they're slow to move because new sales are still bigger.
Forgetting Local Tastes
In China, the trend has shifted away from obvious branding. Young consumers prefer understated luxury — think Loro Piana over Gucci. LVMH owns Loro Piana, but they haven't pushed it enough in China. Instead, they keep flooding stores with monogrammed bags that are now seen as tacky. I spoke to a fashion lecturer in Shanghai who said: "The new rich want to look like they don't need to show off."
Survival Strategies for Investors & Shoppers
For Investors
LVMH stock has dropped about 20% from its 2023 peak. Is it a buy? I'd wait. The decline isn't over yet. Watch for these signals:
- China recovery: If consumer confidence picks up (check retail sales data and property market), LVMH will rebound first.
- Price stabilization: If they stop hiking prices and start offering value, it's a sign management gets it.
- Dividend yield: Currently around 1.7%. If it crosses 3% because of price drop, that's a good entry point.
For Shoppers
Now is actually a great time to buy. Retailers are offering more personal shopping incentives, and inventory is piling up. I've seen discounts on seasonal items even at Louis Vuitton (rare!). Check outlet stores or duty-free in Japan if you can travel. Also, the secondhand market is flooded with “gently used” bags from people who bought during the hype. You can find a Neverfull at 30% off retail.
Frequently Asked Questions
Fact-checked against LVMH's FY2024 interim report and personal observations from store visits in Paris, Shanghai, and Tokyo.
