“Price Hikes Backfire”: LVMH Loses Half Its Market Value, Signaling Erosion of Europe’s Luxury Premium Beyond Asia’s Consumption Slowdown

LVMH’s market capitalization plunges amid weakening Asian demand and higher retail prices
Fallout from price hikes spreads across Europe’s luxury goods and high-end automotive markets
Shifting economic fortunes in Europe and Asia erode the “symbolic premium” of European products

The market capitalization of French luxury conglomerate Louis Vuitton Moët Hennessy (LVMH) has plunged. With luxury demand weakening, particularly across Asia, following the end of the COVID-19 pandemic, years of aggressive price increases have accelerated the deterioration in consumer sentiment. Experts say the luxury industry’s established growth formula—in which loyal customers justified premium price points—is beginning to unravel. As wealth expands rapidly across Asia while Europe’s relative economic standing declines, the symbolic premium once commanded by European luxury brands has weakened.

LVMH Earnings on a Downward Trajectory

According to a Financial Times (FT) report on Sept. 6 (local time), the market capitalization of Paris-listed LVMH fell to around $247.7 billion that day. This was broadly comparable to its level in January 2020, immediately before the COVID-19 pandemic, and less than half its 2023 peak. LVMH had previously seen both revenue and its share price soar on the back of a worldwide luxury-spending boom during the pandemic. Its revenue growth reached 17% in the first quarter of 2023, roughly double the market consensus.

Conditions reversed rapidly once the pandemic-driven boom subsided. LVMH’s organic revenue growth slowed to 9% in the third quarter of 2023, with the company acknowledging that “the exceptional consumption boom that followed the pandemic has ended, and growth is normalizing toward historical averages.” The downturn became considerably more pronounced in 2024. The group’s organic revenue growth stood at just 1% in the second quarter of 2024, while revenue from its fashion and leather goods division, which includes Louis Vuitton and Dior, contracted in the third quarter for the first time since 2020. No meaningful rebound emerged last year. LVMH’s annual revenue fell 5% year-on-year to $94.0 billion, while organic revenue declined 1%. Recurring operating profit and net profit contracted by 9% and 13%, respectively.

Asian Consumers Close Their Wallets

The slowdown in Asian luxury spending is widely regarded as the principal factor behind LVMH’s faltering growth. Asia has historically accounted for a substantial share of the group’s revenue. In 2023, revenue from Asia excluding Japan reached $30.9 billion, equivalent to 31% of total revenue, while the proportion approached 38% when Japan was included. In 2024, however, LVMH’s revenue from Asia excluding Japan fell approximately 12.5% year-on-year to $27.0 billion, with the region’s share of total revenue declining from 31% to 28%. The figure dropped further to 26% last year. The influence of Asian markets that once formed the backbone of LVMH’s revenue is gradually receding.

Asian consumers have turned away from LVMH for a combination of reasons. In China, prolonged weakness in the property market has compounded pressure on household wealth, employment insecurity and the economic slowdown, prompting visible spending cutbacks among middle-class consumers. In Japan, the yen’s protracted depreciation and rising inflation have eroded households’ real purchasing power, raising the barrier to high-end consumption. In South Korea, where luxury consumption surged during the pandemic to the extent that shoppers routinely queued before stores opened, the continuing economic slowdown, elevated interest rates and mounting household debt burdens are simultaneously weighing on disposable income and consumer sentiment.

Price Increases Prove Self-Defeating

LVMH’s aggressive pricing strategy has also been cited as a factor exacerbating its deteriorating performance. According to the FT, LVMH repeatedly raised retail prices across its major brands, using the pandemic-era surge in luxury demand as justification. In 2022, Louis Vuitton increased prices worldwide for leather goods, fashion accessories and fragrances, citing higher raw material, production and transportation costs as well as inflation. Overall product prices rose by approximately 7% on average, while increases for some popular handbags were estimated at 20–25%. Several additional rounds of price increases followed for major products.

Dior pursued a similar strategy. According to an analysis by global investment bank Bernstein, prices for some Dior handbags sold in France rose by more than 50% between 2020 and 2023. Reuters observed that “so-called aspirational consumers—a predominantly middle-class consumer group that admires and emulates the lifestyles and consumption patterns of a particular social class—have reduced purchases of handbags and accessories costing thousands of dollars after becoming increasingly burdened by price increases at LVMH-owned brands.” The FT likewise estimated that approximately 60 million aspirational consumers have withdrawn from the global luxury market in recent years.

Table 1. European Premium Brands Facing a Backlash After Price Increases

Clouds Gather Over Europe’s Luxury Goods Market

Weakening customer demand following price increases is also evident among other European luxury companies besides LVMH. Gucci, the flagship brand of French luxury group Kering, is a prime example. Prices for Gucci’s major products rose by 21% between 2020 and 2023. Gucci’s revenue subsequently fell 22% year-on-year to $7.0 billion last year, while Kering’s overall revenue declined 13% over the same period to $17.1 billion. In Burberry’s case, sales volume contracted 21% year-on-year in the second quarter of 2024, immediately after the launch of a high-priced new collection, and its performance continued to deteriorate thereafter. Revenue fell 17% from $4.0 billion in fiscal 2024 to $3.3 billion in fiscal 2025, while adjusted operating profit plunged from $565.7 million to $35.2 million. Its operating result swung to a loss of $4.1 million.

A similar pattern has emerged in the high-end automotive market. Germany’s Porsche raised U.S. vehicle prices by 2.3–3.6% in July last year. Its annual global deliveries subsequently fell 10.1% year-on-year to 279,449 vehicles, while revenue declined 9.5% from $46.6 billion to $42.2 billion. Operating profit plunged from $6.6 billion to $480.2 million. At Britain’s Aston Martin, the average selling price of core models rose approximately 4.5%, from $239,600 in 2024 to $250,400 in 2025, while wholesale volumes declined 9.7% from 6,030 to 5,448 vehicles over the same period. Revenue contracted 20.6% from $2.1 billion to $1.7 billion, while the operating loss widened from $135.3 million to $350.5 million.

Asia and Europe See Diverging Economic Fortunes

Some experts attribute these developments to the narrowing economic gap between Asia and Europe. As Europe’s relative position in the global market diminishes, the symbolic premium that Asian consumers once attached to European products is likewise weakening. According to the latest purchasing power parity (PPP) data released by Eurostat last month, the European Union’s (EU) gross domestic product (GDP) stood at approximately 18.7 trillion international dollars last year. This was markedly below other major economies, including China at 26 trillion international dollars and the United States at 19.5 trillion international dollars. The EU’s real GDP growth rate during the period was just 1.5%, while Germany, its largest economy, expanded by only 0.2%. The European Commission forecasts that growth will slow this year to 1.1% in the EU and 0.9% in the eurozone.

Asia’s economic presence, by contrast, continues to grow. According to The Wealth Report 2026, published in April by global property consultancy Knight Frank, 31% of ultra-high-net-worth individuals (UHNWIs) with net assets of at least $30 million were located in the Asia-Pacific region. This was well above Europe’s 25% share. The ascent of major Asian economies is also evident in personal wealth growth. According to UBS’s Global Wealth Report 2026, published in June, the number of dollar millionaires in mainland China exceeded 2 million in 2025. Japan likewise had more than 2 million millionaires, while South Korea recorded the highest growth rate among the countries analyzed by UBS, with average wealth per adult rising by more than 50% in real terms since 2020. Commenting on these changes, an industry official said, “As Asia becomes wealthier at a rapid pace while Europe’s relative economic standing weakens, the aspiration that Asian consumers once felt toward European brands is also fading.” The official added, “Brands that raised prices may have expected luxury demand to remain price-insensitive, but the symbolic value of European brands that once justified those high prices is no longer what it used to be.”