The news: LVMH CEO Bernard Arnault warned that “2026 won’t be simple” for the luxury conglomerate due to a challenging, unpredictable environment.

The company plans to stick to the strategy that carried it through 2025: producing high-quality, desirable products that appeal to shoppers worldwide, opening destination-style stores, and containing costs.

Zoom in: LVMH ended 2025 on an uneven note.

While sales in the US and Asia improved in the second half of the year, organic sales for the company’s core fashion and leather goods segment declined, an indication that demand remains tepid. Profitability also fell in Q4, although the company blamed most of the 9% drop in operating earnings on unfavorable exchange rates.

There were bright spots. LVMH’s watches and jewelry business posted a 5% YoY increase in organic sales in the second half of the year, and the continuing strength of Sephora helped drive a 7% increase in sales for the company’s selective retailing division.

Despite the headwinds, LVMH is optimistic about the year ahead.

• The installation of new creative directors at most of its brands is expected to revitalize interest; early success is visible at Dior, where Jonathan Anderson’s collections are generating buzz and beginning to drive sales.
• We expect global personal luxury sales to rise 5.5% this year, a considerable acceleration from last year’s 0.9% growth.

Implications for retailers: LVMH’s decision to focus on controlling what’s controllable is a pragmatic approach for retailers in the luxury sector and beyond in 2026. By prioritizing execution, both on a product and experiential level, LVMH is positioning itself to attract spending from both affluent and aspirational customers and better manage the business effects of geopolitical uncertainty.