Group 1 - The new wave of store openings by LVMH in China is significant, particularly in the context of a weak consumer housing market and deflation concerns [1] - Four major LVMH brands, including Louis Vuitton, Dior, Tiffany, and Loro Piana, are opening large multi-storey stores in Beijing next month, a scale rarely seen in recent years [2] - LVMH is also in discussions to open a new Dior store in Shanghai by 2027, highlighting the strategy of creating massive shopping destinations that offer unique experiences [3] Group 2 - Chinese consumer behavior is shifting from a focus on brand names to seeking personal wellness and experiences, prompting luxury brands to build personal connections with consumers [4] - The latest Louis Vuitton flagship store in Shanghai has significantly increased visitor numbers, contributing to a doubling of sales in the shopping mall where it is located [5] - The performance of stock markets in mainland China and Hong Kong this year may have contributed to increased spending in the luxury sector [5]

Core Viewpoint - LVMH, once considered a luxury goods powerhouse, is experiencing a significant downturn in its fashion and leather goods segment, signaling a broader adjustment in the luxury market as consumer sentiment cools and traditional growth drivers falter [1][2][3]. Group 1: Sales Performance - In Q2 2025, LVMH's fashion and leather goods sales dropped by 9% on an organic basis, marking the largest quarterly decline since the pandemic [2]. - Sales in Japan plummeted by 28%, reflecting a sharp decline in tourist spending, while local consumer fatigue is also evident in the U.S. market [3]. - The traditional growth formula of "tourist-driven + high-net-worth consumption" is failing, impacting both short-term revenue and brand pricing power [3]. Group 2: Brand Innovations and Challenges - Despite maintaining high brand visibility, LVMH's overall revenue growth remains weak due to declining tourist demand in key markets like Japan and Korea [3][4]. - Louis Vuitton launched a new flagship store and a beauty line, but overall revenue growth is still sluggish [3]. - Christian Dior and Celine are undergoing significant creative changes, yet market responses have been muted, with actual sales remaining stable [4][5]. Group 3: Financial Performance - LVMH reported a total revenue of €39.8 billion, a 4% year-on-year decline, with operating profit down 15% to €9 billion and net profit down 22% to €5.698 billion [7]. - The gross margin has decreased from 38% to below 35%, indicating a shift in the brand's profitability amid external pressures [7]. - Currency fluctuations have negatively impacted profits by €225 million, particularly due to the weakening of the U.S. dollar and South Korean won [7]. Group 4: Strategic Shifts - Sephora is one of the few segments showing profit growth, expanding its store presence and enhancing its exclusive brand offerings [8]. - New brands like Fenty Beauty and Maison Francis Kurkdjian continue to show growth, while Parfums Dior maintains its leadership in the fragrance market [8][9]. - LVMH is diversifying its growth avenues beyond luxury goods, including high-end hotels and media ventures, indicating a structural shift towards a "cultural luxury ecosystem" [9][10]. Group 5: Market Sentiment and Future Outlook - LVMH's stock price has dropped nearly 30% in 2025, with market capitalization being surpassed by competitors like Hermès and SAP [11]. - Analysts are tightening their earnings forecasts for the upcoming quarters, reflecting a new reality for LVMH in the absence of pandemic recovery benefits and Asian tourist influx [11]. - The luxury industry is entering a "post-incremental era," where growth is no longer the sole focus, and structural adjustments and cultural value become key themes [11].