LVMH, the world’s largest luxury conglomerate, is signaling a major shift in the global high-end market as its revenue faces a sustained decline. With $94 billion in annual sales, the group’s performance is often viewed as a bellwether for the entire sector. According to market data, LVMH reported a 5 percent revenue decline in 2025 following a 2 percent drop in 2024, with profits falling 9 percent to $20.6 billion.
Why Is LVMH Losing Its Momentum?
The luxury giant is grappling with a combination of overreliance on its core fashion and leather goods segment and a cooling relationship with younger demographics. Fashion and leather goods, which represent nearly half of the group’s sales, saw an 8 percent revenue drop to $44 billion, with profits declining 13 percent, according to industry reports. This downward trend continued into the first quarter of 2026, where group revenues fell 6 percent to $22.2 billion.
Analysts suggest the company’s heavy dependence on flagship brands like Louis Vuitton and Dior creates a “fracture point.” Louis Vuitton, which accounts for an estimated 50 percent share of the fashion and leather goods segment, saw its brand valuation drop from $112 billion in 2025 to $87.5 billion in 2026, according to Kantar. This shift allowed Hermès to overtake it as the world’s most valuable luxury brand at $113 billion.
The global fashion resale market reached $257 billion in 2025, which is roughly 60 percent of the size of the total luxury market. Platforms like The RealReal have capitalized on this, reporting a 24 percent surge in gross merchandise value (GMV) during the first quarter of 2026.
How Gen Z Is Redefining Luxury Value
Younger consumers are increasingly turning away from traditional heritage brands in favor of transparency, value, and ethical consumption. Correspondent Lei Takanashi noted on a Business of Fashion podcast that many heritage houses struggle to resonate with Gen Z because they rely on “antiquated” ideas of luxury. This sentiment is fueled by resentment over aggressive post-pandemic price hikes that haven’t been matched by improvements in quality.
Data from Bain highlights the severity of this disconnect: new customer acquisition rates at the brand level dropped 5 percent in the past year. Furthermore, the share of the total addressable market engaged in luxury has fallen from approximately 60 percent in 2022 to about 40 percent in 2025. Consumers are increasingly trading down to accessible alternatives like Quince, Arket, or Reformation.
Is LVMH Shifting Toward Divestiture?
LVMH is moving away from its long-standing strategy of aggressive acquisition and toward a model of selective divestiture. After completing more than 200 takeovers over 25 years, the group is now pruning its portfolio. Recent moves include the $850 million sale of Marc Jacobs to a joint venture between WHP and G-III, as reported by the Financial Times.
Other potential divestitures reportedly under consideration include the group’s 50 percent stake in Fenty Beauty and its remaining duty-free store fleet. Investment advisor Martin Brettenthaler noted that the company has “flipped into selective divestiture mode,” marking a significant strategic pivot for CEO Bernard Arnault’s empire.
Frequently Asked Questions
Why are luxury brands struggling in Asia?
Western luxury brands are losing their status as the default arbiters of taste in China and Japan. According to regional data, Mainland China declined by about 7 percent last year to $49 billion, while Japan dropped 8 percent to $36 billion in 2025. Consumers are increasingly gravitating toward niche labels and homegrown alternatives.
Are price hikes affecting brand loyalty?
Yes. According to The Wall Street Journal, consumers across various demographics are “quitting” luxury brands due to rapid price increases that lack a corresponding rise in product quality. This has driven a shift toward the resale market and more affordable “luxury-look-for-less” brands.
What is LVMH’s current strategy for growth?
Beyond divestiture, the company is attempting to maintain its appeal through high-profile brand activations, such as the 130-year anniversary celebration of its Monogram canvas bags. However, analysts remain skeptical that creative refreshes alone will be enough to offset the current market headwinds.
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