LVMH Q1 sales were broadly in line, with core F&LG slightly weaker but valuation still attractive

Overview

This report is UBS's first take on LVMH Moet Hennessy Louis Vuitton SA's Q1 sales. The core view is that group organic sales growth of +1% was in line with market and UBS expectations, but the most important Fashion & Leather Goods division still posted a -2% organic decline, slightly weaker than consensus. Although valuation remains attractive and UBS assigns a Buy rating, the report argues that the results alone are not enough to prompt investors to buy aggressively in the near term.

Core views

UBS sees LVMH's Q1 start as somewhat subdued. Group sales did not materially miss expectations, but core F&LG still posted negative growth, and even after stripping out the roughly 1 percentage point negative impact from the Middle East conflict, it is still hard to frame the result as a strong reversal signal. By segment, Wines & Spirits and Watches & Jewellery were better than expected, Perfumes & Cosmetics was broadly in line, and Selective Retailing was slightly below consensus but in line with UBS. Overall, UBS expects consensus estimates to remain broadly stable in the near term, and the results may be treated as a non-event.

Analysis framework

The report uses a framework that compares actual results with consensus and UBS forecasts, focusing on group organic sales growth, total sales, and organic sales performance by business segment, while also incorporating management commentary, geopolitical shocks, and the following quarter's comparison base to assess investor reaction. On valuation, UBS says its target price is based on DCF, SOTP, and relative valuation multiples.

Methodology notes

• Valuation methodsDCF

  discounted cash flow valuation

  UBS says its target price is based on DCF, SOTP, and relative valuation multiple methods; DCF is used to assess a company's intrinsic value by discounting future cash flows.

• Valuation methodsSOTP

  sum-of-the-parts valuation

  The SOTP method is suitable for a diversified luxury group like LVMH, by valuing each business segment separately and then summing them to form an overall valuation.

• Valuation methodsrelative multiples

  relative valuation multiples

  Relative valuation multiples are used to compare LVMH with peer luxury companies or market valuation levels to help determine the target price.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• LVMH.PA

  covered_company

  Strengths

  The world's largest luxury goods group, with Louis Vuitton contributing more than 50% of recurring EBIT; its business spans multiple premium consumer categories; it has historically expanded through acquisitions such as Tiffany, Christian Dior Couture, Rimowa, Loro Piana, and Bulgari.

  Weaknesses

  The core Fashion & Leather Goods division still posted -2% organic sales in Q1, weighing on investor confidence; total group sales were slightly below consensus.

  Comparison

  Group Q1 organic sales growth of +1% was in line with consensus and UBS expectations; F&LG was weaker than consensus but in line with UBS; Wines & Spirits and Watches & Jewellery beat expectations.

  Risks

  Luxury consumption is affected by external shocks, political changes, pricing pressure, brand value, management execution, succession issues, long-term growth expectations, and foreign exchange volatility.

Key data

• Q1 group organic sales growth+1%In line with both consensus and UBS expectations of +1%.
• Q1 group total sales€19,121m2% below consensus of €19,494m, close to UBS's €19,080m estimate.
• Fashion & Leather Goods Q1 organic sales growth-2%Consensus -1%, UBS -2%; the key weaker area highlighted in the report.
• Wines & Spirits Q1 organic sales growth+5%Significantly better than consensus of -1% and UBS's -2% forecast.
• Perfumes & Cosmetics Q1 organic sales growthFlatConsensus +1%, UBS +2%.
• Watches & Jewellery Q1 organic sales growth+7%Above both consensus and UBS expectations of +5%.
• Selective Retailing Q1 organic sales growth+4%Below consensus of +6%, in line with UBS's +4% expectation.
• Middle East conflict impactabout -1 percentage pointThe company said the Middle East conflict had roughly a 1 percentage point negative impact on Q1 organic sales.
• 12-month target price€640.00UBS target price.
• 2026-04-13 price€480.65Reported share price.

Impact & implications

The near-term impact is neutral. Group sales in line with expectations lowers the risk of a meaningful downgrade, but negative growth in F&LG limits share-price catalysts. UBS believes investors are more likely to wait for management's call on Dior improvement, Chinese consumer performance, and the Q2 outlook, especially now that the Q2 year-on-year comparison base becomes significantly easier and whether a clearer growth improvement emerges.

Risks

• External factors such as terrorism and pandemics can negatively affect luxury consumption.
• Sharp political changes or geopolitical conflicts may suppress demand; the report notes that the Middle East conflict already had about a 1 percentage point negative impact on Q1 organic sales.
• Pricing pressure may affect revenue growth and margins.
• Changes in brand value may affect long-term demand and valuation.
• Management execution and succession issues may affect operating stability.
• Changes in the stock market's view of the company's long-term growth could affect valuation multiples.
• Foreign exchange fluctuations may affect sales and earnings performance.

What to watch

• Management's commentary on Dior improvement during the call.
• Performance across consumer groups, especially key Chinese consumer demand.
• The Q2 outlook and whether growth improves as the year-on-year comparison base becomes noticeably easier.
• Whether the Fashion & Leather Goods division returns to positive growth.
• Whether consensus estimates remain stable after the results.