LVMH Faces Key H2 Challenges as Morgan Stanley Highlights 10 Investor Questions

LVMH’s Q2 2025 results revealed a sharper-than-expected slowdown in its crucial Fashion & Leather Goods (F&LG) division, which accounts for nearly half of group sales and three-quarters of EBIT. Organic sales fell 9%, fueling concerns over Chinese demand, U.S. consumer trends, and brand performance gaps. Morgan Stanley says investors are now focused on 10 key questions shaping sentiment for the second half of the year.

Investors want clarity on sales trends, especially whether Q2’s month-end figures suggest a rebound and if Q3’s -3.2% consensus is achievable given easier year-on-year comparisons. The performance of the Chinese consumer segment, reportedly down 19% and representing 35% of sales, along with steep declines in Korean (-18%) and Japanese (-13%) clusters, remains a focal point. Brand-wise, Louis Vuitton slightly outperformed, while Dior lagged, with speculation that Dior, Celine, and Fendi saw low double-digit drops.

Price growth was “moderate” with flat mix, meaning volume declines drove weakness. Questions linger over whether lower price points could boost traffic. Margins are also under scrutiny, with F&LG’s EBIT margin falling 340bps to 34.7% amid currency and tariff headwinds. Other divisions faced mixed results: Wine & Spirits benefited from European and U.S. sell-in, possibly due to tariff-related stocking, but Cognac fell 15%. Tiffany and Bulgari posted growth, but competition in watches is intensifying. Perfumes and Cosmetics saw modest gains led by Dior, Guerlain, and Fenty, while Sephora’s momentum raises questions about reaching its €20 billion 2028 target.

With Dior leadership changes and Vuitton anchoring the portfolio, investors are watching whether LVMH can counter volume declines, navigate Asia’s weakness, and protect margins through strategic pricing, marketing, and capital allocation. The second half of 2025 may prove decisive for sustaining growth in the world’s largest luxury group.