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
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New Price Target: €610 (down ~7–8%)
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Cause: Disappointing Q1 results and a slower recovery outlook in 2025
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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:
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Q1 2024 Japan growth: +32%
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Q2 2024 Japan growth: +57%
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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:
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Rebound in Chinese demand is proving patchy
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Macroeconomic pressures persist in key global markets
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FX volatility continues to drag revenue conversion
Analyze the Fundamentals
For investors tracking LVMH and the luxury sector, use these to monitor ongoing performance:
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Ratios (TTM) – Track key profitability and valuation metrics
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Price Target Summary – Compare analyst revisions in real time
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.
