mparison base, with the first half of last year benefitting from a surge in tourism linked to a weakened yen. In Asia outside Japan, overall trends remained comparable to 2024, but LVMH noted “an improvement in sales to local customers in the second quarter”.  Still, LVMH’s leadership sounded a cautiously positive tone. Chairman and CEO Bernard Arnault emphasised the strength of LVMH’s brands and the group’s commitment to long-term strategy over short-term market cycles. The luxury conglomerate is experiencing a significant drop in demand, particularly in China, which has been a key growth driver for decades. According to consultancy Bain, the size of the Chinese market declined more than 18 per cent last year to around 350 billion yuan ($48.80 billion) and sales are on track for a flat performance this year.  LVMH is ramping up initiatives in China to regain sales from affluent Chinese customers. Last month, the company introduced ‘The Louis’, a museum-like space in the form of a cruise ship located in the heart of Shanghai. Earlier this year, LVMH’s flagship house Dior and jeweller Tiffany & Co opened a cafe and a three-storey flagship, respectively, in Chengdu.  Mixed signals across business  Fashion and leather goods, the group’s most important division by far, reported revenues of $22.5 billion, down 7 per cent organically from the same period last year. Operating profit dropped 18 per cent to $7.8 billion. The wines and spirits division was the hardest hit, with revenue falling 7 per cent and operating profit down 33 per cent to $616.2 million. According to the company, weak demand for cognac, especially in China and the US, and the lingering effects of trade tensions have depressed volume and pricing power. Perfumes and cosmetics sales held steady, with nearly flat organic growth and a modest 4 per cent drop in operating profit, while watches and jewellery saw revenue flat at $6.0 billion, and operating profit decline to 13 per cent.  In contrast, selective retailing was a bright spot with Sephora posting both revenue and profit growth.  “We head into the second half of the year with great vigilance,” the chairman said. Portfolio simplification in progress LVMH is in the midst of a strategic portfolio adjustment. According to reports from the Wall Street Journal, the group is in advanced discussions to sell off Marc Jacobs, a fashion label acquired in 1997.  Among potential buyers are Authentic Brands Group and WHP Global, both known for licensing-driven brand management. The Marc Jacobs brand has struggled to scale internationally despite efforts to streamline its product architecture and retail footprint in recent years. The divestment would mark the third such move in less than two years. LVMH sold Off-White, the label founded by Virgil Abloh, to Bluestar Alliance last year. Earlier this year, Stella McCartney bought back the stake previously held by the luxury group. “We will not keep brands if we believe they are not a good add-on, or we are not the right operator to operate them,” Cecile Cabanis, chief financial officer at LVMH, said during the company’s earnings investor call last Thursday.  One area of risk that LVMH has not addressed in detail is reputational. Earlier this month, its Italian brand Loro Piana, known for its ultra-rare vicuña wool and whisper-quiet aesthetic, was named in media reports alleging labour exploitation at some supplier factories. The group has not publicly disclosed the results of any internal investigation, nor has it issued a comprehensive statement. Yet for all its structural shifts and external pressures, LVMH’s creative machine continues to hum. At Louis Vuitton, Pharrell Williams’ latest menswear show in Paris was a technicolor ode to joy. Christian Dior made headlines with its appointment of Jonathan Anderson, whose men’s collection debuted to acclaim at the Hôtel des Invalides. Meanwhile, Fendi and Loro Piana both marked centenaries with high-profile exhibitions and capsule collections. Further reading: Why LVMH doubled down on Jonathan Anderson to drive Dior’s next growth chapter.