By Carol Ryan

The number of shoppers in the mood to spend on expensive trinkets is shrinking. This is a headache for companies such as LVMH, whose business is set up to sell luxury to the masses.

Shares in Louis Vuitton's owner fell 6% after the company reported weak demand for the last three months of 2025. Its main profit engine, the fashion and leather goods division, recorded its sixth consecutive quarter of declining sales.

LVMH's cognac business is also weak as middle-income consumers in China and America trade down to cheaper alcohol brands. Sales in the wine and spirits division dropped 9% compared with a year ago.

Ultra-rich Americans are spending heavily on luxury goods thanks to the nearly $10 trillion increase in the S&P 500 since the start of 2025. This is powering the very top of the luxury market, particularly jewelry.

Richemont, which owns Cartier and reported earlier this month, said sales in its Americas division rose 14% in the fourth quarter. LVMH's jewelry brands, which include Bulgari and Tiffany, are also in demand.

But for other luxury brands to get back to the roughly 6% sales growth they managed historically, middle-income shoppers need to start spending again.

A recovery in China, where demand has been lackluster for nearly four years, would help. More Chinese spending would also balance the luxury industry's exposure to the U.S. stock market rally.

LVMH is doing what it can to cut costs and protect profit margins. New creative designers at Christian Dior and Celine are also trying to revive demand with fresh collections. The real driver of a luxury recovery - a global middle class that feels optimistic about its future - still feels a way off.

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(END) Dow Jones Newswires

January 28, 2026 06:39 ET (11:39 GMT)

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