Investing.com -- LVMH reported a drop in annual revenue as challenging global economic and geopolitical conditions continued to pressure the luxury sector.
LVMH’s ADRs fell 1.6% on Tuesday following the report, while its Paris-listed shares slumped around 8% by 08:35 GMT after Wednesday market open.
Speaking on the analyst call, CEO and owner Bernard Arnault said he was cautious about the year ahead.
"With the continuing geopolitical crises, with economic uncertainty and the policies of certain states, including ours, to tax us to the maximum and create unemployment - I think there is reason to be a little cautious," he told analysts.
The group posted €80.8 billion in revenue for 2025, down 5 percent from the previous year, with organic revenue slipping 1 percent.
The slowdown was most pronounced in Europe during the second half, while the United States returned to growth on the back of stronger local demand. Japan fell from the prior year, which had been lifted by tourist spending, but the rest of Asia showed notable improvement.
Fourth-quarter performance showed some stabilization, with organic revenue growth of 1 percent to €22.7 billion. The second half also delivered a 1 percent organic increase, supported by improved trends across all business groups.
Kepler Cheuvreux analyst Charles-Louis Scotti said this was "a reassuring set of 2025 results, with unchanged like-for-like (LFL) sales trends in Q4 despite c.400bps tougher YOY comparisons."
"We continue to see LVMH as a good proxy on the expected sector recovery and reiterate our Buy rating," he added.
Profit from recurring operations fell 9 percent to €17.8 billion in 2025, weighed down by currency fluctuations. Net profit came in at €10.9 billion. Operating free cash flow rose 8 percent to €11.3 billion.
Fashion and Leather Goods, LVMH’s largest division, recorded an 8 percent decline in reported revenue, though the group said local demand remained resilient.
Wines and Spirits saw weaker demand for cognac, while Selective Retailing delivered a strong performance.
Chairman and CEO Bernard Arnault said LVMH showed “solidity” in a disrupted environment and highlighted continued investment in brand desirability and innovation.
Despite uncertainty heading into 2026, the group said it aims to reinforce its leadership in global luxury.
Bernstein analyst Luca Solca said "the upside from cost and capital controls will be more limited" in 2026, given that "a lot of work has been done already."
"What would push the business and the share price forward is a global demand recovery and a return to top-line growth. This started in 2H25, albeit incrementally," he added.
"If so, and if our base case scenario is correct, LVMH can be a compelling investment," Solca continued.
(Sam Boughedda contributed to this report.)
