LVMH Growth Slows Despite Strong Luxury Portfolio
LVMH Moët Hennessy - Louis Vuitton, the world's leading luxury goods company, has seen its growth slow in recent times. Despite this, the company continues to hold a strong position in the market, with a diverse portfolio of high-end brands.
LVMH, owned by Bernard Arnault, boasts an impressive roster of luxury brands including Louis Vuitton, Fendi, and Bulgari. These brands contribute to LVMH's significant global sales, with Asia accounting for 36%, and China alone making up 22%-23%. The company's largest category, Fashion and Leather Goods, generates around 50% of its sales.
Over the past decade, LVMH has more than doubled its revenues and nearly tripled its operating income. However, its recent financial performance has been less robust. The company's top line has slowed, and its operating profits have decreased by 15% in the first half of 2025. LVMH's free cash flow has improved due to reduced capital expenditure, lower taxes, and working capital management, rather than stronger fundamentals.
The outlook for LVMH depends on factors such as tariffs in the American market and the reacceleration of consumption in China. The company's stock trades at a forward P/E of 26, with a 5-year expected PEG ratio of 3.4, and an EV/EBITDA ratio of 12.5.
Despite recent deceleration in growth and a decline in profits, LVMH's strong brand portfolio and global presence continue to make it a significant player in the luxury goods market. The company's future performance will be influenced by external factors, such as tariffs and consumer spending in key markets.
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