se in its watches and jewellery division, the fastest-growing segment of the business. Meanwhile, LVMH’s wines and spirits division, which includes champagne brand Moët & Chandon and cognac maker Hennessy, reported five per cent organic growth. In contrast, sales in the selective retailing division, which includes Sephora, grew by six per cent. While this report marks LVMH’s first quarterly increase in almost two years, it missed analysts’ expectations for growth of 1.7 per cent. That disappointment has been reflected in the company’s share price. LVMH’s shares have lost about 30 per cent of their value this year. UBS analysts summed up the results in a note to clients: “The results were decent, but unlikely to change the debate.” That debate centres on whether luxury demand will recover after struggling in recent years due to factors such as geopolitical conflicts and rising living costs. Where LVMH is getting things right Bernard Arnault, LVMH’s CEO, attributed the company’s positive performance this quarter to its “solidity and effective strategy”. Arnault partially credited the improved performance to the popularity of Jonathan Anderson’s first round of designs for Christian Dior among consumers and critics alike, the launch of new Louis Vuitton stores in Beijing and Seoul, and the success of Tiffany & Co. and Bulgari’s recent product launches. Several retail experts, including Neil Saunders, managing director at GlobalData, agree with Arnault that these strategic steps have helped deliver a successful quarter after a long period of decline. Saunders said the results suggest that, after a softer period, LVMH is starting to make progress. “The latest results show that, after a softer period, LVMH is starting to make progress. The main pivot has come from the fashion and leather goods segment, which is pleasing as the division has not delivered organic growth for the past two years. Some of this is related to the creative reset across various brands – especially Christian Dior, where Jonathan Anderson launched new collections, which have been well received.” He added that the same sense of freshness had spread across many of LVMH’s other fashion brands. Similarly, the conglomerate’s watches and jewellery segment delivered another stellar quarter. While the rise in sales partially reflects broader industry dynamics that have driven elevated interest in investment pieces, Saunders said LVMH has also successfully leaned into the trend with intriguing new collections at Tiffany & Co. and Bulgari. “Overall, there is a sense that in response to a more challenging market, LVMH is upping its activity and energy, and customers are responding in kind,” Saunders said. Is LVMH set for a successful Q3? Arnault stated that while LVMH continues to pay close attention to its margins, it is well-positioned for success over the next few months. Despite challenges including political conflict and the temporary closure of certain stores in the Middle East, Morningstar analyst Jelena Sokolova said LVMH is in relatively strong shape. “While recent performance has been disappointing, it is not unexpected given that backdrop. Over the longer term, we continue to believe LVMH is well positioned to return to industry outperformance,” said Sokolova. Frankie Margotta, strategy director at consulting firm TripTK, argued that investors should view the results through a luxury lens rather than comparing them with mass-market businesses. “I’m sure investors are disappointed, which is fair [considering the results], but holding luxury brands to the same expectations as non-luxury businesses will often leave us disappointed,” Margotta said. He argued that luxury operates according to a different set of principles from the wider retail sector, with distinct economics, growth models and approaches to innovation. While true luxury brands are generally insulated from many of the cultural and economic pressures affecting mainstream consumers, LVMH’s broad portfolio, which spans almost every luxury category and price point, also leaves it more exposed to those headwinds. “LVMH is on the right track. They’re using stronger categories like watches and jewellery, wine and spirits to help move the business forward, while continuing to address areas where performance is trailing, such as fashion and leather goods, perfumes and cosmetics. They’re also making smart moves by putting the right people in place at key houses to establish a clearer creative vision and point of view, which is already evident in the performance of brands like Christian Dior and Louis Vuitton.” What do LVMH’s numbers reveal about the current state of luxury? Barney Stacher, CEO of consultancy Retail OCD, believes LVMH’s latest results indicate that luxury demand is beginning to stabilise, even if the recovery has yet to convince investors. “LVMH’s results suggest that luxury demand is beginning to stabilise, but the recovery is neither broad nor deep enough yet to satisfy investors,” Stacher said. He argued that Dior’s momentum under Jonathan Anderson demonstrates that luxury brands cannot cut costs their way back to desirability. Instead, they need compelling creative direction, culturally relevant products and stores that feel like destinations. Even so, he cautioned that LVMH’s fashion and leather goods division – its largest and most profitable business – grew by only one per cent during the quarter and remained down 1 per cent for the first half, representing progress rather than a full recovery. Looking ahead, Stacher said LVMH and its peers must rebuild their relationship with aspirational luxury shoppers, who have been squeezed by inflation, economic uncertainty and years of price increases. “Luxury cannot simply keep raising the admission price while offering the same emotional experience,” he said. “Over the next six months, I expect continued but uneven improvement. In this case, big is good, wide is good, and cash is still king: LVMH’s scale, portfolio diversity and investment capacity give it an advantage, provided its creative renewals produce things customers genuinely desire – not simply more marketing around familiar logos.” He added that the group also needs a stronger ladder of entry-level products, more personalised clienteling and greater value through craftsmanship, service and exclusivity rather than discounting. “This was a better report, but investors are no longer rewarding signs of life alone; they want proof of renewed desire.” Further reading: Former LVMH boss Anish Melwani on why connection is luxury’s most valuable asset