Investment Rating - The report does not explicitly state an investment rating for LVMH, but it implies a cautious optimism regarding the company's performance and strategies moving forward [7]. Core Insights - LVMH's revenue in 2025 was resilient at €80.8 billion, with an organic growth rate of -1% year-on-year, but profits were significantly impacted by foreign exchange headwinds and pressures in high-margin sectors, leading to a 9% decline in operating profit to €17.8 billion [8][9]. - The company experienced a notable divergence in performance across its segments, with Watches & Jewelry and Selective Retailing showing strong growth, while Fashion & Leather Goods and Wines & Spirits faced challenges [9][10]. - Management emphasized the importance of monitoring foreign exchange impacts on operational performance and profit sensitivity, indicating a strategic focus on cost discipline and selective investments to maintain cash flow and improve operational quality [8][12]. Summary by Sections Revenue Performance - LVMH achieved €80.8 billion in revenue for 2025, with a reported decline of 5% year-on-year, primarily due to foreign exchange effects [8][11]. - The organic growth rate improved in the second half of 2025, reaching +1% in Q4, after a -3% decline in the first half [8][9]. Segment Analysis - In Q4 2025, organic revenue growth rates were as follows: Watches & Jewelry +8%, Selective Retailing +7%, Perfumes & Cosmetics -1%, Fashion & Leather Goods -3%, and Wines & Spirits -9% [9][10]. - For the full year, Selective Retailing grew by 4%, driven by Sephora's strong performance, while Watches & Jewelry saw a 3% increase, largely supported by the Japanese market [9][10]. Brand Performance - Core brands such as LV, Dior, and Tiffany showed varying strategies: LV maintained stability through new product launches and limited editions, Dior focused on aggressive marketing and product expansion, while Tiffany is in a transformation phase to enhance its brand and product mix [10][12]. - The report highlights the importance of high-end demand, noting a structural split in customer sensitivity to economic conditions, with ultra-high-net-worth individuals being more stable compared to the broader high-income segment [12][13]. Geographic Insights - LVMH's revenue mix remained balanced across regions, with the U.S., Europe, and Asia (excluding Japan) each contributing 26% to total revenue, while Japan's share decreased to 8% [11]. - The report notes that the U.S. and Europe showed stable growth patterns, while Japan experienced a significant decline of 12% in organic growth for FY25 [11]. Future Outlook - Management expressed a medium-to-long-term optimistic outlook, citing rising global living standards as a support for high-quality product demand, but acknowledged short-term uncertainties due to geopolitical and macroeconomic factors [7][13]. - The controlling Arnault family plans to increase its stake in the company, reflecting confidence in LVMH's long-term value creation capabilities [13].

Core Insights - LVMH Group shows signs of performance stabilization with a 1% organic growth rate in Q3, despite challenges in the European market due to currency fluctuations [1][9] Financial Performance - In Q3, LVMH reported revenue of €18.28 billion, reflecting a 4% decline when accounting for a 5% negative currency impact [2] - The fashion and leather goods segment continued its decline, down 2% year-on-year, marking three consecutive quarters of decrease, although the decline rate has narrowed [2] - Wine and spirits revenue increased by 1% year-on-year, driven by restocking in the U.S. market and increased sales of rosé wine [2] - Other segments such as perfumes and cosmetics, watches and jewelry, and selective retailing saw revenue increases of 2%, 2%, and 7% respectively [2] Market Dynamics - The CFO highlighted strong local demand in key markets, particularly in the fashion and leather goods sector, with positive growth in mainland China and improvements in the U.S. market [4] - For the first nine months, LVMH achieved total revenue of €58.09 billion, with fashion and leather goods contributing €27.61 billion, approximately 47.5% of total revenue [5] - In terms of regional performance, the U.S. market saw a 3% year-on-year revenue increase, while Europe and Japan experienced declines of 2% and 13% respectively; Asia (excluding Japan) grew by 2% [6] China Market Insights - The company noted a recovery in the Chinese market, with local consumption showing mid-to-high single-digit positive growth, although overall consumer performance remains close to stable with low single-digit negative growth [9] - Despite challenges in the macroeconomic environment, demand in China is encouraging, although overseas spending by Chinese tourists is still experiencing double-digit declines [9] - The CFO indicated that the fourth quarter may present greater challenges due to base effects and anticipated stronger negative impacts from currency fluctuations compared to Q3 [9]

Core Insights - The travel retail industry is experiencing a structural disconnection between passenger volume and retail sales, with global passenger numbers reaching a record high of 9.5 billion in 2024, while travel retail sales only reached $74.1 billion, down 13% from 2019 [2][14] - The disparity in travel retail performance varies by region, with the Asia-Pacific region facing declines due to policy resistance and weak consumer spending from mainland China, while India shows strong growth [2][21] - External structural factors such as geopolitical tensions, economic fragmentation, and technological advancements are exerting continuous pressure on the travel retail sector [4][6] Passenger Behavior and Shopping Trends - Passenger shopping frequency is declining at an annual rate of 4%, and the value proposition of travel retail is weakening, with nearly 40% of travelers questioning the actual savings from duty-free shopping [3][39] - Different consumer segments exhibit varied spending behaviors, with Gen Z travelers showing purposeful spending on relevant and unique items, while older travelers are more conservative and price-sensitive [3][44] Regional Performance Disparities - The Asia-Pacific region, despite having the largest travel retail market valued at approximately $31 billion, saw a 2% decline in retail sales in 2024 compared to 2019 [20][21] - Europe, the Middle East, and Africa are experiencing synchronized growth in travel retail and passenger volumes, with Europe seeing a 9.2% increase in retail sales [22][23] - The Americas are at a critical turning point, with retail sales slightly exceeding pre-pandemic levels, but facing challenges such as fragmented retail layouts and limited digital channels [27][28] Category Performance Variability - The perfume and cosmetics category accounts for over one-third of global travel retail sales, with a slight decline in overall sales, while the tobacco category saw a 13% increase [30][31] - The candy and gourmet food categories grew by 8%, driven by promotional sales and the influence of younger consumers [31] - High-end products are gaining traction, while mid-tier categories are shrinking, indicating a polarization in consumer spending [47][49] Consumer Confidence and Value Perception - The average spending per traveler has decreased significantly, dropping to $15.5 in 2024, down 17% from 2019 [36][39] - The perception of value in travel retail is shifting, with consumers increasingly skeptical about the price advantages of duty-free shopping compared to local retail channels [42][55] - Clear pricing and value propositions are essential for driving consumer confidence and conversion rates in travel retail [52][56] Evolving Business Models and Strategies - The travel retail business model is evolving slowly, with a need for strategic reassessment to adapt to changing consumer behaviors and market dynamics [5][6] - Companies must focus on building resilient operations that can thrive amid ongoing disruptions and volatility [7][6] - The integration of dining experiences within retail spaces is emerging as a key strategy to enhance consumer engagement and drive sales [57][62]