LVMH considers selling some underperforming assets to cope with weak demand

Source: Global Market Report

According to sources familiar with the matter, French luxury giant LVMH is considering selling some of its fashion, beauty, and alcohol brands, in what could be one of the largest retrenchment moves in its nearly 40-year history, as a response to sluggish demand.

Sources say the businesses LVMH plans to sell include the fashion brand Marc Jacobs, its stake in singer Rihanna's beauty brand Fenty Beauty, and American wine producer Joseph Phelps Vineyards.

These potential deals could bring the group billions of euros in capital for reinvestment in its business, not including a recent series of asset disposals.

Over the past 18 months, LVMH has already sold the luxury streetwear brand Off-White created by the late designer Virgil Abloh, the Greater China business of travel retailer DFS, and its 49% stake in the Stella McCartney eponymous fashion brand.

LVMH owns over 75 brands, spanning high fashion, cognac, hotels, newspapers, and more. Selling these underperforming businesses is part of its cost-control strategy.

The group is refocusing on major profit-driving brands such as Louis Vuitton and Dior. Since 2023, as the luxury market boom during the pandemic reversed, sales of these brands have slowed. The so-called "aspirational" consumers have less disposable income, and the ongoing price hikes by top brands, surpassing inflation, together have dampened market demand.

Bernstein analyst Luca Solca said, “LVMH is clearly reviewing its portfolio, looking at what is underperforming and what is dragging down margin, because they are in a period of greater business pressure.”