LVMH (EU:MC) shares fell 2.4% on Thursday to their lowest level in five years after Bernstein reduced its forecasts for luxury-sector growth, citing early third-quarter data on spending in China.
Analysts led by Luca Solca lowered their third-quarter industry organic growth forecast by 110 basis points to 4.9%, compared with growth of 6.3% in the second quarter.
The revision reduced Bernstein’s full-year 2026 organic growth forecast for the industry by 40 basis points to 5.1%.
Bernstein Points to Slower Luxury Sales Growth in China
Bernstein cited a sample of luxury shopping mall sales data from mainland China that showed “a sharp deceleration in growth over June and July 2026, across price points and categories, with a -12% fall in July,” according to the analysts.
The data followed broadly unchanged growth during the first quarter and low-single-digit growth in the second quarter.
Bernstein described the latest development as the fourth interruption to a recovery in Chinese luxury spending since the pandemic.
“We have seen three false dawns already: in end-2023, end-2024, and end-2025,” the analysts said.
According to Bernstein, the previous periods were associated with expectations that government stimulus would support a sustained recovery before factors including structural issues, lower property prices and continued deflation affected spending trends.
The brokerage also identified taxation as a potential factor affecting spending. Bernstein said increased scrutiny of Chinese offshore wealth and a greater risk of tax enforcement “has likely had a chilling effect” on spending by high-net-worth consumers.
Bernstein Reduces LVMH Sales and Earnings Estimates
Bernstein lowered its organic sales growth forecasts for LVMH for 2026 and 2027 by 66 basis points.
The brokerage also reduced its earnings-per-share estimates by 1% for 2026 and 6.1% for 2027, while maintaining its Outperform rating and €570 price target.
The analysts said maintaining the recovery in LVMH’s fashion and leather goods division would require Louis Vuitton to increase engagement with middle-class consumers, which they said would likely involve adjustments to the product mix during the second half of 2026.
Kering and Hermes Forecasts Also Reduced
Bernstein also lowered its growth forecasts for Kering and Hermes, while leaving its estimates for Richemont unchanged.
The brokerage cited “relative resilience for Richemont’s jewellery brands in Mainland China.”
Bernstein named Richemont its Best Idea within the sector. It also identified Kering as having the most near-term “self-help” potential through Gucci price reductions and retail consolidation.
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