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LVMH Faces Fashion Slowdown: Goldman Sachs Cuts Outlook and Price Target

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Image credit: Jonathan J. Castellon

Luxury giant LVMH is feeling the pressure as Goldman Sachs slashes its stock forecast, citing weak first-quarter performance — especially in its critical Fashion & Leather Goods (F&LG) segment. The luxury bellwether reported a 5% decline in F&LG sales, underperforming expectations from both JPMorgan and the broader market, which were pricing in a modest 1-3% drop.

Key Takeaways from Goldman's Revision

  • New Price Target: €610 (down ~7-8%)

  • Cause: Disappointing Q1 results and a slower recovery outlook in 2025

  • Primary Concern: Margin contraction due to sustained sales pressure

What's Dragging LVMH?

The main culprit behind the soft numbers is a sharp drop in Chinese tourist spending in Japan, which had been a key revenue driver in 2024:

  • Q1 2024 Japan growth: +32%

  • Q2 2024 Japan growth: +57%

  • Q1 2025: Flat to slightly negative volumes

LVMH's famed product mix — once a growth engine — has now flattened, removing an important profitability lever.

Why It Matters

Despite strong cost-containment efforts, Goldman Sachs believes foreign exchange headwinds and demand softness will continue to weigh on margins. This underperformance isn't just a blip; it suggests a structural slowdown in one of LVMH's most profitable segments.

Sector-Wide Caution

Goldman Sachs is signaling a broader warning on the luxury sector, stating that it is too early to turn bullish, especially as:

  • Rebound in Chinese demand is proving patchy

  • Macroeconomic pressures persist in key global markets

  • FX volatility continues to drag revenue conversion

Analyze the Fundamentals

For investors tracking LVMH and the luxury sector, use these to monitor ongoing performance:

Final Thoughts

LVMH's recent stumble may not spell disaster, but it highlights the luxury sector's vulnerability to macro shifts and consumer demand trends. Until there's clear evidence of a rebound in Asia and stabilization in margins, Goldman Sachs advises staying on the sidelines.

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