To The Moon

Q2 Earnings Report. On Thu, 24 Jul 2025, luxury purveyor and market leader $LVMH-Moet Hennessy Louis Vuitton(LVMUY)$ reported a disappointing Q2 2025 and H1 2025: Revenue: came in at $46.7 billion (€39.8 billion), this is down by -4% YoY from $48.9 billion (€41.7 billion). (see above) Earnings per share (EPS): came in at $2.67 vs expected $2.78 vs Q2 2024’s $3.16; that’s a -15.5% YoY decline. To many industry analysts, the results were not too alarming because they have already forecasted a luxury market slowdown in 2025. Causes For Concerns. Alarmingly, it is LVMH’s : Revenue increasing rate of decline, from -2% in Q1 2025 to -7% in Q2 2025. Profitability taking a hit as well. H1 2025’s net profit fell by -22% to $6.9 billion. “Truly disturbing” is LVMH’s “fashion & leather goods” segment’s performance: It used to make up about 50% of LVMH’s total sales. However, in Q1 2025, it dropped by -4% (or -5% organically) . In Q2 2025, it dipped a further -12%. For H1 2025, it registered a -8% decrease, totaling $22.4 billion. Chairman Says… In a statement, Chairman & CEO Bernard Arnault: Attempted to put a positive spin on the earnings news. He emphasized that LVMH showed “solidity in the current context” of geopolitical and economic disruptions. Beyond the prevailing uncertainties, the conglomerate remain focused thanks to the long-term vision that has always guided them. Reassuring investors, that the team “head into H2 2025 with great vigilance.” Turbulence Ahead Many analysts are of the opinion that LVMH finds itself in unfamiliar territory. That is, being on the losing end of a market slowdown. During the last global luxury market downturn, it did not miss a beat. In fact, excluding 2020 covid-19 pandemic, LVMH has grown steadily since, until 2024. Just 2024 alone, Revenues fell by -2% to $99.4 billion. Profits declined by -17% to $14.7 billion. It was driven by a -3% downturn in “fashion & leather” goods, to $48.2 billion, with net profits from recurring operations falling by -10%. Like many US firms, LVMH did not provide earnings guidance for the remainder of 2025, citing market uncertainty. That said, Bain (a privately held consulting firm) in association with Altagamma (globally recognized as authentic ambassadors of Italian style) is predicting a decline of up to -5% in the global luxury market this year. Compare this with (defacto) luxury industry leader LVMH’s main segment fall of -8% in H1 2025, Bain’s forecast certainly looks a tad too optimistic. Additionally, Bain also stated that the global luxury market faces its biggest challenges and risks in 15 years due to : Economic turbulence. Complex social and cultural shifts. Bain’s parting warning is, “turbulence will likely become the new baseline for the luxury industry for a long time to come”. Path Forward Despite the financial headwinds, LVMH will stay the course, powered by its long-term strategy of carefully nurturing the creativity and craftsmanship of the 75 iconic luxury brands in its portfolio. New Creative Directions With so much riding on its fashion and leather goods segment, two of its premier brands – Christian Dior & Loewe – have new fashion directors to inject a breath of fresh perspective. Dior’s Jonathan Anderson has just shown his first men’s collection, sparking excitement about his upcoming women’s collection, set to debut this fall at Paris Fashion Week. Loewe’s Jack McCollough & Lazaro Hernandez will also introduce their first collection at Paris Fashion Week too. However, it will take time for the new creative directors’ influence to translate into sales. Tarnished LVMH Brand On the flip side, LVMH’s quiet luxury brand - Loro Piana has been caught up in an expanding controversy surrounding allegations of worker abuse in the luxury supply chain. Loro Piana is the 5th luxury brand and LVMH’s 2nd (with Dior’s 2024 debacle being the 1st), to suffer reputational damage that threatens to taint not only the brands involved, but the entire luxury industry. Management noted that Dior still experiences “softness” and underperformed its segment since the incident. According to TD Cowen’s estimates: Dior contributes between 20% & 25% of LVMH’s “fashion & leather goods” segment’s revenue. And it is LVMUY’s prized jewel. The other major contributor to the “fashion & leather goods” segment is none other than fashion house “Louis Vuitton (LV)”. Louis Vuitton Crossroads When it comes to earnings reporting, LVMUY (the conglomerate) does not report sales breakdown “by brand”. TD Cowen have good reasons to believe that: LV’s sales has nosedived too. Foresees LV facing increased competitive pressure from upstart “quiet luxury” leather brands such as Cuyna, Patou and Polène, in the $700 to $2,000 price range. To counter upstart leather brands, LV should (a) invest in innovation and (b) improved quality at LV’s lower price points items, that start at in the low $2,000s. Strategically, LVMH (thru partnership with L Catterton), has a minority stake in Polène, that reportedly doubled sales in the last year. LV’s Vulnerabilities A new report by EY looks at challenges faced by legacy luxury brand like LV and its “aspirational luxury” customer base, that used to fuel LV’s growth. With a weak market condition, these aspirationals are spending less, while LV’s richer customers are being more picky. The report also noticed that, “the more desirable a brand becomes, the more sales grow, the more people wear brands, the less desirable the brand becomes”. This becomes a key challenge for LV, that is best expressed by the mythic ouroboros symbol – the serpent that eats its own tail. Strategies that fueled growth over the years have turned against it, threatening to erode its continued mystique, particularly among luxury’s highest potential clientele. Mitigating Factors (1) US-EU Concluded trade deal. On Sun, 27 Jul 2025, US and EU agreed to a trade deal, setting a 15% tariff on most EU goods entering the US, averting an even higher tariffs. With this clarity, LV could plan its price list accordingly. (2) New US-based factory. With the US accounting for 25% of revenues in H1 2025, Mr Bernard Arnault has planned to open a 2nd factory in US, Texas by early 2027 to stay on Trump’s good terms. Besides the current Johnson County, TX factory that opened in 2019, LVMUY also operates 2 others in California. (3) Sale of Marc Jacobs. LVMH is working on a sale of its Marc Jacobs fashion brand, which it has owned since 1997. This comes as LVMUY contends with a slump in demand. Possible contender for Marc Jacobs includes (a) Authentic Brands Group (that owns Reebok), (b) WHP Global (that has acquired Vera Wang in December 2024) and (c) Bluestar Alliance (that has acquired Off-White from LVMUY in September 2024). Like staff layoff in the IT world, in the luxury world one sells its fashion house/brand. Rating & Price Target. Investment advisor TD Cowen has downgraded LVMH stock to “Hold” from “Buy” in April 2025, and rating remains status quo as of July 2025. Reasons for “Hold” rating: Overall weakness across LVMH’s portfolio in H1 2025. Limited visibility on a near-term rebound. Flat revenue at LVMH’s 2nd largest revenue segment - “Selective retail” (includes Sephora & Le Bon Marché) - $10.1 billion. Falling revenue at LVMH’s 3rd largest revenue segment - “Watches & jewelry” (includes Tiffany, Bvlgari, TAG Heuer) - $6.0 billion. Falling revenue at LVMH’s 4th largest revenue segment - “Perfumes & Cosmetics” - $4.8 billion. Falling revenue at LVMH’s smallest revenue segment - “Wine & Spirits” - $3.0 billion; is dependent on US market that accounts for 35% of revenue. Mr Arnault has ruled out selling this business. Instead he plans to simplify on segment’s structure and brand-focus. In conclusion, Cowen does not expect to have clearer visibility on LVMH until after H2 2025, clearly indicating that renewed growth may not happen until 2026 or beyond. As of 29 Jul 2025 Stock Price. LVMUY stock price peaked on 27 Jan 2025, a day before its 2024 earnings were announced. Thereafter, the stock began its descend, bottoming on 26 Jun 2025 at $102.61 per share. This is because LVMH’s Q4 2024 revenue came in flat YoY at $25.1 billion (€23.9 billion) in total revenue. My viewpoints : (mine only) US tariffs will drive the costs of living higher across the board for all trading countries. This should come into effect in drips and drabs from August 2025 onwards. Luxury goods are non-essential “wants” that everyone aspires to have, especially during good times. With a weak Chinese and EU economies and creeping inflation returning to US by the month, it is difficult to stay upbeat about LVMUY in the immediate to mid term. It's hard to imagine what the “new normal” will look like once Trump’s tariffs fully take effect, so thinking about long-term investments is impossible right now. Support and Resistant prices will be $109.58 and $111.09 respectively. Remember to check out my other posts. (See below). Help to Repost ok, Thanks. Must Read: Click on below titles to access. Repost to share, Like as encouragement ok. Thanks. XOM & CVX, Oil sector's Vampire & Werewolf ! Thu, 31 July. Picked post. Will AAPL and NVDA rescue INTC ? Wed, 30 July. Idea post. S&P 500 - Rally Winners. Will Rally Cont'd ? Tue, 29 July. Picked post. Do you think Chinese, EU and US economies will recover by end 2025 or slipped further into complications arising from tariffs implementation ? Do you think LVMUY is a “buy” if it falls below the $100 level ? If you find this post interesting, give it wings! ️ Repost and share the insights ? Do consider “Follow me” and get firsthand read of my daily new post. Thank you. @Daily_Discussion @TigerPM @TigerStars @Tiger_SG @TigerEvents