Key Morningstar Metrics for LVMH Moet Hennessy Louis Vuitton
- : €620Fair Value Estimate
- : ★★★★Morningstar Rating
- : WideMorningstar Economic Moat Rating
- : MediumMorningstar Uncertainty Rating
LVMH MC revenue trends remained soft in the first quarter, with group organic growth at 1% dampened by a 2% decline in fashion and leather, its most profitable division, while most other segments turned positive. The war in the Middle East shaved off 1% of growth.
Why it matters: Overall luxury demand recovery and LVMH’s industry outperformance in the fashion & leather goods division are key to our investment thesis on LVMH but take time to materialize. Fashion & leather sales, excluding the impact of the Middle East conflict, were flattish (down 3% in the fourth quarter), with demand improving among Chinese and American clientele.
- Sales to Americans were up low to midsingle digits in the first quarter from being slightly negative in the fourth quarter. Chinese demand was flat (low- to mid-single-digit negative in the fourth quarter). Sales in the Middle East (6% revenue contribution) turned double-digit negative and remain affected by low tourist flows. There isn’t a significant spillover effect from the conflict to other nationalities, although recovery remains lackluster.
- Segment-wise, watches & jewelry sales were up 7% with solid performance of jewelry brands and negative performance in watches (a positive read-across to Richemont), while wines & spirits turned positive, up 5% after a prolonged three-year downturn, led by strong performance of champagne.
The bottom line: We are maintaining our €620 fair value estimate for wide-moat LVMH. Our forecasts call for low-single-digit revenue growth and slight margin improvement in 2026, which we still view as reasonable. We believe LVMH is likely to return to industry outperformance over the long term, supported by the strength of its brands and above-peer marketing budget. The current pullback and slight industry lag follow nine years of very strong outperformance in fashion & leather (2015-23), a trend we cautioned investors against in 2021-23. We see shares as undervalued.
