The market’s fascination with all that glitters continued in earnest last week, as gold and silver hit all-time highs. But precious metals aren’t the only shiny assets motivating investors to act. High-end luxury brands are also competing with their more affordable counterparts as affluent consumers continue to spend like there is no tomorrow.
Can this trend continue despite tariffs and an increasingly toxic trade war? Recent earnings from leading companies such as Louis Vuitton indicate reasons for optimism, but also caution in the face of an unpredictable economic environment.
Bifurcation in consumer trends highlights profits for luxury brands
Mixing consumer trends is a topic we highlighted last month as luxury brands continue to report strong sales growth while mid-to-low-end brands struggle.
Some of the key dynamics driving this trend include:
- Affluent consumers feel less impact from tariffs and high interest rates than middle- or lower-class consumers.
- Stock market growth over the past three years has pushed more asset-holding families into the net worth, providing a tailwind towards high-end brands.
- High prices and inflation are forcing all consumers to narrow their purchasing focus, frequently choosing high-end products with long-term value.
Prestigious brands are exerting influence right now, and the resulting profits are sending their stocks soaring. Louis Vuitton is one of the best of these brands, with annual sales of over $90 billion and an extensive product line across multiple divisions.
LVMH reports surprise third-quarter rebound — but headwinds remain
LVMH-Moet Hennessy Louis Vuitton today
LVMH-Moët Hennessy Louis Vuitton
As of 04:05 PM ET
- 52 week range
- $101.80
▼
$159.97
- Dividend yield
- 2.10%
Louis Vuitton became LVMH Moet Hennessy Louis Vuitton SE OTC: LVMUY in 1987 when the two companies merged to form a group of luxury brands that sell everything from handbags to jewelry to wine. The company is divided into five divisions, including the legacy fashion and leather goods division and the growing perfume and cosmetics division.
With a market capitalization approaching $350 billion, LVMH is one of the largest and most recognized luxury brands in the world.
But despite its standing, recent quarters have been a struggle for LVMH. Tariffs, inflation and rising spot prices for gold and silver were hovering over the company like a specter at the beginning of the year. However, the company’s third-quarter results yielded some positive news that made investors optimistic once again.
During the conference call, CFO Cecile Cabaniss was keen to highlight the improved performance across all five divisions, including better-than-expected growth from the Fragrances, Cosmetics and Selective Retail divisions.
Fashion and leather goods saw a 2% year-over-year decline in growth, better than the expected 4% decline and a huge improvement over Q2’s 9% decline. The wine and spirits sector grew by 1% year-on-year, while watches and jewelry grew by 2%.
Overall, LVMH’s third-quarter sales totaled more than $21 billion (based on current EUR/USD rates), representing 1% organic growth year-over-year. One of the geographies highlighted by Cabanis is China, where LVMH’s sales are close to turning positive year-over-year after a long period of stagnation.
Analysts were generally impressed with what they heard from the LVMH team, and the stock received four upgrades in the past four weeks, including one from Hold to Strong Buy from UBS Group.
Cabanis notes that headwinds are still coming from LVMH, and they are coming from several angles. Tariffs remain high on luxury goods entering the United States from Europe, and an explosion in gold and silver prices threatens the margins of LVMH’s watch and jewelry division.
In addition, China remains a volatile sales environment, and a full recovery will require gradual progress. Like many conference calls from the retail sector, the tone remains one of cautious optimism.
The chart indicates increasing upward momentum
LVMH’s long-term view may be of cautious strength, but the short-term outlook looks more attractive thanks to the daily chart. The stock has lagged most of the year, rising just 7% over the past 12 months and just 38% in the previous five years. However, it looks like momentum is finally picking up steam in LVMH stock.
The stock bottomed during the liberalization day tariff bear market and fell between $100 and $110 per share until August, when the price finally crossed the 50-day simple moving average (SMA) for the first time since March.
A breakout above the 200-day simple moving average quickly followed, and the stock rose 13% the day after its third-quarter 2025 earnings release.
The stock is up more than 25% in the past three months, and its 50-day and 200-day simple moving averages are on track to form a golden cross, a prominent bullish technical signal. The Relative Strength Index (RSI) confirms the upward momentum, although it is quickly approaching the overbought threshold, signaling a warning signal for investors looking to take profits.
However, the short-term trend still looks promising, and long-term fundamentals are improving.
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