LVMH’s full-year revenue rose by 1% on an organic basis to €84.7bn. Declines in Fashion & Leather Goods, which accounts for nearly half of total revenue, was offset by growth in Selective Retailing and Perfumes & Cosmetics.
Operating profit fell 14% to €19.6bn, missing market forecasts of €20.4bn. Profits across all divisions fell, including a 10% decline in Fashion Goods & Leather, which was exacerbated by faster declines in Wines & Spirits and Watches & Jewellery.
Free cash flow rose from €8.1bn to €10.5bn, due to lower operating investments. Net debt was €31.4bn at year-end.
In January 2025, some brands including Louis Vuitton and Tiffany are already seeing double-digit growth. Markets are forecasting full-year revenue to grow 5.6% to €89.2bn.
A dividend of €13.0 per share has been announced, in line with last year.
The shares fell 6.1% in early trading.
Our view
LVMH ended 2024 with a big miss on profit expectations thanks to declines across all its major divisions. But it wasn’t all bad, with some brands seeing strong growth in the early weeks of 2025. There were also some signs of improvement in China, and tax cuts in the US have given management increased confidence in the outlook across the pond.
LVMH owns a vast stable of powerhouse luxury brands like Christian Dior, Channel, Moet and many more. We think this diversity means it’s better placed than many of its peers to ride out the current ups and downs of the luxury market.
The group’s high item price points are supported by what we view as genuine creative and marketing superiority. Being able to charge more means LVMH's operating margins are healthy too, which has also dripped down into free cash flow, ultimately underpinning the group's current ability to pay dividends. However, no dividend is ever guaranteed.
Adept management is a serious asset too. The group's CEO Bernard Arnault, is the group's largest shareholder, which probably explains the focus on long-term success.
No investment comes without risks and we think it's prudent to remember there would be knocks to the valuation as and when Arnault steps down. We have faith it will be well-handled, but given his huge influence, there are likely to be jitters when the day comes.
The debt level is something we’re keeping an eye on. The acquisition of jewellery giant Tiffany stretched the balance sheet, so debt’s sitting higher than we’d like. Plus, weaker sales have led to a build-up of inventory, which could squeeze cash flows in the near term.
Chinese consumers haven’t been propping up earnings as they have in the past, with slower economic growth weighing on the region. It’s hoped that China’s ongoing stimulus blitz could mark the start of a turnaround here, and there are signs the wheels are starting to turn, but it’s still too early to tell.
We still think LVMH could thrive over the long term and provide a compounding opportunity thanks to its unrivalled stable of brands. The valuation is sitting just above its long-run average
LVMH has an unrivalled stable of world-class brands, which we think will allow it to thrive over the long term. That’s reflected in the valuation sitting slightly above the long-run average despite the soft trading backdrop. That could take some time to improve, so expect some volatility in the near term.
Environmental, social and governance (ESG) risk
The retail industry is low/medium in terms of ESG risk but varies by subsector. Online retailers are the most exposed, as are companies based in the Asia-Pacific region. The growing demand for transparency and accountability means human rights and environmental risks within supply chains have become a key risk driver. The quality and safety of products as well as their impact on society and the environment are also important considerations.
According to Sustainalytics, LVMH’s management of ESG risks is strong.
The group has a board-level committee that oversees the company's social and environmental issues. However, remuneration policies only loosely mention ESG-related performance targets for executives, and its overall ESG reporting falls short of best practice.
LVMH key facts
All ratios are sourced from Refinitiv, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
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