The French luxury goods group LVMH ended the 2025 financial year with a sobering balance sheet. After the euphoria of the post-pandemic years, Bernard Arnault’s group recorded a turnover of 80.8 billion euros. This corresponds to a decrease of five percent based on the figures published on Tuesday.
This nominal decline is significantly exacerbated by exchange rate fluctuations, particularly the weakness of the US dollar and the yen against the euro. Organic results were more resilient, with a slight decline of one percent on a like-for-like and currency-adjusted basis. The operating profit adjusted for special effects follows this trend and amounts to 17.7 billion euros, which corresponds to a decline of nine percent.
Profitability under the influence of exchange rate fluctuations
Adjusted operating income is an important indicator of actual performance. It was heavily affected by currency volatility, resulting in a negative impact of 1.06 billion euros. This phenomenon, together with the slight decline in organic sales, explains the reduction in the operating margin. It is now at 22 percent, compared to 26.5 percent two years ago.
This decline illustrates a “scissor effect”. The fixed costs of a network of over 6,200 boutiques result in a less dynamic sales base. This forces the group to control its investments more strictly.
Continued weakness in demand in China
The central pillar of the group, the fashion and leather goods division, is not spared from this cycle change. Sales fell by eight percent. Although the operating margin remained at a remarkable level of 35 percent, the division’s earnings fell by 13 percent.
This development reflects the fragility of the Asia region (excluding Japan). Their share of total sales has fallen from 31 percent to 26 percent in two years. Loro Piana’s resilience helps limit losses. Nevertheless, the declining consumer enthusiasm on the Chinese mainland is forcing us to rethink our dependence on this volume market for houses like Louis Vuitton or Dior.
Problems with wine and spirits
The wines and spirits sector is the most urgent point of observation. The operating result fell by 25 percent over the course of the year. In addition to the customs tensions regarding cognac in the USA and China, the company is facing profound social change.
Global wine consumption has fallen to its lowest level since 1996. In 2023 alone it fell by 2.6 percent, according to the International Organization of Vine and Wine. Given this fundamental trend, LVMH must reinvent its consumption occasions. The trend is characterized by a relative disinterest in red wines and the emergence of a “non-alcoholic” or more casual lifestyle.
The decline in champagne volumes to under 61 million bottles shows that even the prestige segment is no longer completely disconnected from the realities of public health. The challenge for the group is now to accompany this sobriety by radically upgrading its offering. There must also be a diversification towards spirits that meet new consumption habits and changing tastes.
Retail division remains growth driver
In contrast to this trend, the retail division “Selective Retailing” is proving to be the most important growth driver. Its current operating income increased by 28 percent. This achievement is based on a two-pronged strategy.
On the one hand, Sephora confirms its status as a sustainable growth engine. By attracting a younger clientele through exclusive launches such as the Rhode brand, the chain is gaining market share. It also improves its margins thanks to an effective omnichannel strategy.
On the other hand, the division certainly benefited from a drastic policy of “rationalization” in DFS activities, i.e. duty-free stores. Such aggressive cost cutting is often undertaken to repair a balance sheet prior to a sale. It enabled the group to present optimized profitability indicators. This occurred shortly before the closing of the sales agreement for DFS assets in Greater China in January 2026.
With the sale of the stores in Hong Kong and Macau, LVMH marks the end of its travel retail model. This was too exposed to geopolitical risks. Instead, the group is now concentrating on the jewel Sephora.
The financial approach remains future-oriented
Despite these challenges, LVMH’s financial structure remains exemplary solid. The available operating cash flow exceeds eleven billion euros, an increase of eight percent. This ensures the group complete strategic autonomy.
The net debt ratio was reduced to 9.9 percent of equity. It demonstrates a prudent approach that preserves the ability for future acquisitions. Maintaining a proposed dividend of 13 euros confirms the group’s intention to stabilize investor confidence, even if it results in a more linear return.
In summary, LVMH is entering a transition phase. Here, profitability per square meter takes priority over geographical expansion. The group relies on hyper-exclusivity to justify high prices. At the same time, he cleans his portfolio of the most volatile activities.
The 2026 financial year will be characterized by the implementation of the new creative directions at Celine and Givenchy. It will serve as a benchmark for how well the global number one can renew the desirability of its brands in a fragmented economic environment.
Note: The analysis is based on the consolidated data as of December 31, 2025. The announced dividend is subject to the approval of the Annual General Meeting, scheduled for April 23, 2026.
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