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In the early hours of October 13 Beijing time, LVMH-Moet Hennessy Louis Vuitton (LVMHF) released its third-quarter 2026 earnings report. The report and subsequent earnings call disclosed that Chinese customer demand fell 15% in the third quarter, dragging the core Fashion and Leather Goods division's organic revenue down 5%. Group management responded during the earnings call to the trademark dispute with Chinese domestic tea beverage brand Molly Tea, acknowledging that it did have a negative impact at the beginning of the quarter.
Chinese Customer Demand Plummets 15%
In the first three quarters of this year, LVMH-Moet Hennessy Louis Vuitton (LVMHF) achieved revenue of 57.148 billion euros, with organic growth of 2%. Of that, third-quarter organic growth was 1%, a marked slowdown from 3% in the second quarter. Overall, the group maintained growth, but after breaking down the regional structure, the trajectory of momentum shifting became clear. The United States, Europe, and Japan became the pillars of growth this quarter: the US grew 5%, Japan grew 6%, and Europe grew 4%. Asia excluding Japan saw organic revenue decline 5%, the only region with negative growth.
Behind this divergence lies the weakness of Chinese customer demand. According to the LVMH-Moet Hennessy Louis Vuitton (LVMHF) earnings report and earnings call disclosures, in the third quarter of this year, across the entire group, Chinese customer demand fell 15% (mid-teens percentage), Chinese consumers' overseas spending declined in the mid-single digits, while domestic spending saw a double-digit decline. This means that the dual engines that supported LVMH-Moet Hennessy Louis Vuitton (LVMHF) growth in Asia over the past few years — "Chinese tourists' overseas spending" and "domestic consumption" — are now stalling simultaneously.
The group's largest profit source — the Fashion and Leather Goods division — has become the most directly pressured area. The division's cumulative organic revenue in the first three quarters declined 2%, with the third-quarter decline widening to 5%, far below analysts' expectations of 1.6%. Group management explicitly pointed out that the decline was "mainly driven by Chinese customers." Meanwhile, the Louis Vuitton brand itself also suffered logistics and transportation disruptions, which additionally dragged down quarterly organic growth by more than 1 percentage point. The Wines and Spirits division presented a different picture: Hennessy cognac maintained "good momentum" in the Chinese market, and Asia as a whole performed steadily, with the division achieving 6% organic growth in the third quarter. This divergence also reflects that the slowdown in the Chinese market is highly concentrated in the high-end fashion and leather goods categories.
Image source: LVMH-Moet Hennessy Louis Vuitton (LVMHF) earnings presentation
Watches & Jewelry and Sephora Step Up to Drive Growth
During this earnings call, Group CFO Cécile Cabanis addressed the trademark dispute with Molly Tea. She acknowledged that the dispute "did indeed have a negative impact at least at the beginning of the quarter," but stressed that it is difficult to precisely quantify its impact, and made clear that the group will not stop investing in the Chinese market because of this. Based on this earnings report, the sources of growth are shifting from "China-driven" to "diversified-driven." In the first three quarters of this year, the robustness of the US market (+4%), the rebound in the Japanese market (+5%), and the moderate recovery in the European market (0%) collectively offset the weakness in the Asian market. On the business side, the Watches and Jewelry division achieved 8% organic growth in the first three quarters, making it the fastest-growing business division within the group, with Tiffany and Bvlgari's jewelry businesses performing particularly strongly. The Selective Retailing division achieved 6% organic growth, becoming another growth pole; Sephora continued to gain share in multiple markets globally.
During the earnings call, management stated that short-term measures such as price cuts are not advisable, and the group will adhere to a long-term strategy of protecting brand positioning. This statement is consistent with the earnings report's outlook of "continuously enhancing brand appeal," with the group explicitly making "continuing to strengthen iconic products and elevate brand desirability" its core strategy for the remainder of 2026. The role of the Chinese market has shifted from a "certainty engine" to a "variable requiring patient cultivation." Management revealed that at the end of the third quarter and the beginning of the fourth quarter, Chinese customer performance had already improved somewhat. At the same time, however, the group holds a cautious attitude toward the outlook, believing that the restoration of consumer confidence will still take time.
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