Luxury stocks gain after LVMH reports return to quarterly sales growth

Investing.com -- Luxury stocks rallied on Wednesday after LVMH’s quarterly update signalled a stabilisation in demand, lifting sentiment across the sector.

Shares in LVMH rose 12% to more than 599 euros in morning trade after the group reported stronger-than-expected third-quarter sales, with peers Hermès, Kering, Richemont, Burberry and Moncler advancing between 5% and 8%.

LVMH posted a 1% increase in group sales for the quarter, helped by improving demand in China. The performance marked the company’s first quarter of growth this year, offering some relief to a luxury sector that has been under pressure from weakening discretionary spending.

JPMorgan analysts said they now see the backdrop as positive enough to expect a broadly better reporting season for luxury names.

"We anticipate the luxury sector to also be strong today, with positive commentary on most nationalities boding well for a generally better luxury reporting season, especially for companies/brands that went into this more favourable backdrop with strong brand momentum," they wrote. 

LVMH said that trends in Asia excluding Japan — a region heavily influenced by Chinese consumers — showed a “noticeable” improvement nine months into the year.

“Mainland China turned positive in Q3,” Chief Financial Officer Cecile Cabanis told analysts on a call.

Cabanis warned that headwinds remain in the fourth quarter, citing currency effects and macroeconomic uncertainty, but said the group remains confident in the creative repositioning underway across its brands.

Sustained financial progress will “take time” with “gradual sequential improvement,” she added.

Fashion and leather goods, which include Louis Vuitton and Dior and generate the bulk of LVMH’s profits, saw sales fall 2% year-on-year in the quarter. But that marked a notable improvement from the 9% decline reported after the second quarter, signalling a potential turning point for the group’s core division.

The luxury industry has been mired in a downturn since the post-pandemic surge faded. After several years of price increases that boosted margins at brands such as Louis Vuitton and Dior, demand has cooled, particularly among more price-sensitive shoppers.

The sector is also contending with broader economic pressures, including tariffs imposed by U.S. President Donald Trump, ongoing stress in China’s property market and higher production costs for jewellery due to the recent spike in gold and silver prices.