LVMH Q4 Earnings Update
As anticipated, the results were not very good.
LVMH, the world’s leading luxury products group, has released its full-year results for fiscal year 2025.
As many of our loyal TDI members know by now, I’ve got a soft spot for luxury businesses. Not necessarily because of the value they add to society (that’s up for debate), but more for what goes on behind the scenes: the psychology, the anti-marketing principles, the rich history, and all the intricate layers that make these companies so fascinating.
Introduction
LVMH Moët Hennessy Louis Vuitton is a luxury goods conglomerate (or holding) that makes money by owning and managing a collection of high-end brands across various sectors. The company operates a portfolio of over 75 brands (also known as Maisons), including some of the most prestigious names in luxury. Each brand has its own distinct identity but benefits from the scale and financial backing of LVMH. The 75 Maisons are organized into six business groups, based on the age of the founding of the brand.
Financial highlights
🔴 Wines and spirits declined -9% or -5% organically.
🔴 Fashion and leather goods declined -8% or -5% organically.
🟠 Perfumes and cosmetics declined by -3% or 0% organically.
🟢 Selective retailing was flat or +4% organically.
🔴 Profit from operations dropped from $19.6 billion to $17.8 billion.
This doesn't look good because fashion and leather goods are still the most important and highest-margin business group. It is worth noting that exchange rate fluctuations had a significant impact on revenue and profit. (It shaved off at least €1 billion from recurring operations.)
KPIs
🟠 Revenue: €80.8 billion (-5% reported, -1% organic)
🔴 Operating profits: €17.8 billion (-9%)
🟠 Operating Margin: 22.0% (down 110 bps from 23.1% in 2024)
🔴 Net Profit: €10.9 billion (-13%)
🔴 Basic EPS: €21.86 (vs. €25.13 in 2024)
🟢 Operating Free Cash Flow: €11.3 billion (+8%)
🟢 Net Debt/Equity Ratio: 9.9% (improved from 13.3% in 2024)
🟢 Net debt: $6.86 billion → LVMH is reducing its debt load
Important takeaways
🌟 The star performer within LVMH was Sephora, achieving record revenue and profit growth. This business group grew 4% organically. Sephora plans to enter new markets (e.g., Croatia) and roll out the “My Sephora” loyalty program. Rhode (founded by Hailey Bieber) was Sephora’s biggest-ever launch.
LVMH is reducing its exposure to volatile markets in travel retail by agreeing to sell DFS’s business in China (Hong Kong and Macao) to China Tourism Group Duty Free. This resulted in a €0.5 billion estimated loss.
LVMH acquired a further 9% stake in Loro Piana for €1.0 billion, bringing ownership to 94%. If you ask us, it's a great sign. It’s one of the strongest luxury brands in the world, resembling quiet luxury with massive brand prestige and pricing power.
LVMH is reshuffling and moving people around. Jonathan Anderson took over Christian Dior (Couture/Men/Women), Sarah Burton joined Givenchy, Michael Rider joined Celine, and Maria Grazia Chiuri moved to Fendi.
Red flag / Green flag
🟢 - Despite lower profits, operating free cash flow grew 8% to €11.3 billion, proving disciplined working capital management and lower tax/capex outflows.
🟢 - Sephora continued to gain market share globally, driven by exclusive brand successes (e.g., Rhode) and expansion in the UK and Latin America.
“We continued to gain market share as world leader in beauty retail” - Bernard Arnault
🟢 - Gearing dropped to 9.9%, and LVMH now holds €13.5 billion in cash and equivalents plus available-for-sale assets, providing immense flexibility for future M&A or shareholder returns.
🟢 - The Watches & Jewelry business group managed +3% organic growth, outperforming the broader group, supported by Tiffany & Co.’s high jewelry success and Bvlgari’s record year.
🔴 - The Fashion & Leather Goods division, LVMH’s profit engine, saw margins contract to 35.0% from 37.1% in 2024.
🔴 - Wines & Spirits revenue dropped 9% reported (-12% organically for Cognac & Spirits), heavily impacted by the US and China markets and trade tensions. The outlook remains neutral regarding potential tariffs in the US and anti-dumping measures in China, with a focus on cost reduction programs.
🔴 - Revenue from Asia (excluding Japan) fell by 2 percentage points to 26%, telling us a cooling of the Chinese consumer relative to other regions.
🔴 - LVMH remains highly sensitive to currency fluctuations, which erased over €1 billion in recurring operating profit in 2025 alone.
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