Luxury goods giant LVMH CEO Bernard Arnault announced on Thursday (July 24) plans to establish a second factory in Texas, USA by 2027. The company’s CFO Cecile Cabanis expressed confidence on the same day that the trade negotiations between the European Union and the Trump administration “will soon yield positive results.”
LVMH announced its second-quarter financial results on that day, with revenue decreasing by 4% to 19.5 billion euros (approximately 22.95 billion US dollars). Sales in the core fashion and leather goods sector dropped by 9%, exceeding the market’s estimated 6% decline. The wine and spirits business also declined due to weak demand for cognac in the US and Chinese markets. The overall performance fell short of expectations, highlighting the challenges the group faces with slowing luxury goods demand.
LVMH stated that total revenue for the first half of this year decreased from 42 billion euros in the same period last year to 39.8 billion euros. Operating profit decreased from 11.6 billion euros to 9 billion euros, with net profit attributbale to shareholders decreasing by 22% to 5.7 billion euros. Despite stable demand in Europe and the US, the Asian market remained flat, with subdued consumption demand in China and a decline from Japan’s strong performance last year.
Arnault has been actively lobbying the EU in recent months to resolve trade tensions with the US. He told the Wall Street Journal, “I am doing my utmost to facilitate an agreement with the US.” He also announced plans to expand LVMH’s production presence in the US by establishing a new factory in Texas by 2027. In 2019, Arnault established a Louis Vuitton (LV) factory in Texas during Trump’s first term, which was seen as a successful move to avoid luxury goods tariffs.
Cabanis noted that if the US were to implement a 15% overall tariff on exports to Europe in the future, it would still be a positive signal for customers overall. She emphasized that, apart from the wine and spirits sector, LVMH’s brand portfolio still has pricing power, which helps alleviate tariff pressures.
The performance of Sephora continues to be strong, driving growth in the selective retail sector; the watches and jewelry, as well as the perfume and cosmetics sectors, remained relatively steady. The company stated that it will continue to focus on brand attractiveness and product quality, while maintaining confidence in the long-term outlook.
LVMH will distribute a midterm dividend of 5.5 euros per share on December 4th.