Luxury is supposed to be recession-proof, but 2025 tested that theory because in that year the world’s largest luxury group LVHM reported a 13% drop in net profit to €10.9 billion. For a company long seen as the industry’s most reliable growth engine, that’s a sharp reversal.
It would be an exaggeration to say that LVMH is falling off a cliff, but gravity is definitely kicking in. The luxury group closed 2025 with revenue, down by 5%, while profit from recurring operations slid 9% to €17.75bn. Momentum’s fading after an exceptional run as revenue rose from $40.6bn in 2016 to $93bn in 2023, before easing to $91.5bn in 2024 and $87.3bn in 2025.
Asia was supposed to spark the comeback, instead, it’s extending the setback. Investors briefly rushed back into LVMH in October 2025 on early signs of a China rebound, fueling an $80bn luxury rally only for the stock to give most of it back and sliding to 9%.
The cracks are showing
If luxury fatigue is emerging, then fashion appears to be ground zero. LVHM's most profitable segment, that is, the fashion and leather goods division saw sales decline by 2% in Q3. That’s a rare stumble for brands like Louis Vuitton and Dior, and it matters because this division typically carries the highest margins and sets the tone for the rest of the portfolio. Wines and spirits saw organic revenue fall 5%, with profits plunging 25%, hit by weaker cognac demand. Meanwhile, organic revenue slipped 1% in 2025, with Q4 growth stuck at 1%, unchanged from the previous quarter.
To be clear, LVMH isn’t framing this as a downturn. In fact, it doubled down and in its official annual communication, the company described 2025 as a “solid performance”, emphasizing resilience over acceleration. There were, in addition, a few bright spots beyond the surface of setback. Operating free cash flow jumped 8% to €11.33bn, and net financial debt dropped 26% to €6.85bn.
LVMH is reminding everyone that it's still a cash cow generating serious revenue, even in a softer demand environment. Strong cash flow shows the luxury brand isn’t in trouble, but softer growth shows that luxury demand is cooling, and LVMH is learning that even high-end demand has a speed limit.
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