The market is waiting for LVMH report: what 7 questions should investors ask the company's management?

On October 14, luxury giant LVMH will release its third quarter report. Banks generally expect the company to report a slow but gradual business recovery.

Since the beginning of the year, LVMH securities have lost almost 15% in value, and for the first half of the year - one third (quotations fell to the levels of 2020). Starting from July, the shares began to recover their losses little by little.

LSEG said its third-quarter revenue will be €18.2 billion, down 4.5% year-on-year.

At the end of the second quarter, it reported a 4% drop in revenue to €19.5 billion. Net profit for the first half of the year fell by 22% to €5.7 billion (the luxury giant publishes data on profits twice a year). Organic sales of LVMH's main business segment of fashion and leather goods fell by 9% to €9 billion, which was worse than analysts' expectations (they predicted a decline of 7%). Among the reasons the company called the weakening of demand in Japan compared to the same period last year, when the country had a tourism boom. Now it has gone down.

The company may show improved performance in its core business in the third quarter, Citi analyst Thomas Chauvet believes. Citi estimates LVMH's expected revenue at €17.99 billion, a year-on-year decline of 1% in organic terms and 6% when adjusted for currency and other factors. In the fashion and leather goods division, he forecasts a 4% decline in organic sales. This would already be considered a significant improvement, given the depth of the decline in the second quarter.

Financial company Kepler Cheuvreux maintained a "buy" recommendation on LVMH shares in its October 1, 2025 report and raised its target price from €580 to €600. This represented a 14.5% increase from the closing price that day. Analysts' revenue forecast is €18.1 billion.

They expect a slight improvement in comparable sales dynamics in the third quarter after a weak second quarter - minus 1% year-on-year vs. minus 4%. The Fashion & Leather Goods division, in their opinion, will show a 4% decline in comparable sales.

The luxury giant's locomotive is the Louis Vuitton brand, while Fendi, Celine and Dior, on the other hand, are dragging its performance down, the company's filings show.

In the long term, Kepler Cheuvreux believes that the worst period for LVMH is over: organic sales growth (around 4%) and margins are expected to gradually recover in 2026. This will be supported by a new cycle of designer collections and stabilization of consumer demand in China.

Kepler Cheuvreux notes that the improvement in sales dynamics at the end of the third quarter is explained only by comparison with the low base of last year, and not by a real increase in demand. The exception here is the United States. In the States, Kepler Cheuvreux forecasts that comparable sales growth should accelerate by 3% in the third quarter, unchanged in the second quarter.

Analysts at the financial company warn that LVMH will again give investors bad news in the fourth quarter: comparable sales could fall by 2%. Here again, the basis for comparison will play a role: the US and Europe saw strong sales growth last year at this time. The main pressure on the company's business comes from customers in Asia, especially China. In Japan, however, Kepler Cheuvreux expects the demand situation to improve.

UBS analysts also believe that the worst is over for LVMH, but no significant improvement is expected. On September 29, the Swiss bank maintained a "neutral" rating and raised its target price from €487 to €513 per LVMH share - this price was approximately equal to the current one at that time. The target is now 5.3% below the closing price on October 13.

UBS lowered by 1.5% its forecast for earnings per share for 2025 (to €2.14) and for the dynamics of organic sales of the fashion and leather goods segment (minus 6% instead of minus 5%) and the watches and jewelry segment (the bank previously expected them to remain unchanged, now forecasts a 1% drop). All - taking into account the updated exchange rates.

Barclays wrote that it gives LVMH a "neutral" rating (Equal Weight) because it sees "limited positive drivers for growth" in the near term. There is a risk that growth momentum will slow in the U.S. market - which is the main driver for the company. Therefore, the bank said in a note, the key fashion division will remain in negative territory in 2025. And that poses additional risks to LVMH's earnings.

UBS has compiled a list of questions for the new reporting that the bank believes investors will focus on.

- What will LVMH do with its pricing policy, given the business impact of U.S. duties?

- What is the company's margin outlook for the fashion and leather goods division given the decline in sales?

- How will sales grow across consumer segments, especially among Chinese buyers, given recent signs of improving consumer demand in mainland China?

- Because of the dollar's weakness (it has lost almost 9% YTD against a basket of six currencies), investors may want LVMH to comment on the potential impact of foreign exchange rates on margins in the second half of the year and into 2026.

- Investors will also focus on the company's plans to possibly optimize its fashion store chain.

- One more question: what measures is LVMH's watches and jewelry division taking to compensate for the rise in gold prices? On October 7, the price of the metal reached a new record of more than $4 thousand per ounce, and since the beginning of the year, gold prices have risen by more than 50%.

- In addition, according to UBS, investors will be interested in "recent trends in the cognac market, particularly in the US". In the first half of 2025, the company's profit from continuing operations in the alcohol segment collapsed by 33% year-on-year to €524 million, the most serious drop among all LVMH business segments. In the statements, the luxury giant noted the continued decline in demand for cognac.

According to LSEG, a total of 29 analysts have recommendations on LVMH. 17 of them have a "buy" recommendation, 10 have a "hold" recommendation and two have a "sell" recommendation. The average target price is €560.7, up 3.8% from the closing price on October 13.

This article was AI-translated and verified by a human editor