LVMH Stock Hits Five-Year Low as Bernstein Flags Faltering China Recovery

Shares of LVMH (LVMH) fell 2.4% on Thursday to their lowest level in five years after analysts at Bernstein highlighted a potential pause in the recovery of Chinese luxury spending, raising concerns about a key growth market for the sector.

China Spending Decelerates

In a note to clients, Bernstein analysts led by Luca Solca warned that early third-quarter data indicates a halt in the "gentle" recovery observed over the past year. The firm pointed to a sample of luxury shopping mall sales data in mainland China that revealed a -12% decline in July 2026, a sharp reversal from flat to low-single-digit growth in the first half of the year.

As a result of these weakening trends, Bernstein has revised its forecasts for the luxury industry:

• Q3 2026 organic growth forecast was cut to 4.9%, down from a previous estimate of 6.3%.
• Full-year 2026 organic growth forecast was lowered by 40 basis points to 5.1%.

A 'Fourth False Dawn'

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The analysts described this as the "fourth such pause since the pandemic," following three previous "false dawns" in late 2023, 2024, and 2025. They noted that past hopes for a sustained recovery, often tied to government stimulus, have repeatedly faded due to persistent structural issues like falling property prices and deflation.

Bernstein also identified a new potential headwind: increased tax scrutiny. The note suggested that a rising risk of tax enforcement on Chinese offshore wealth "has likely had a chilling effect" on spending by high-net-worth individuals, who have been a crucial source of demand for luxury goods.

Impact on LVMH and Sector Peers

For LVMH specifically, Bernstein trimmed its 2026 and 2027 organic sales growth forecasts by 66 basis points and lowered its earnings per share (EPS) estimates by 1% and 6.1%, respectively. Despite these cuts, the firm maintained its Outperform rating on the stock with a price target of €570.

The analysts suggested that for LVMH's core fashion and leather goods division to sustain its recovery, its flagship Louis Vuitton brand will need to re-engage with middle-class consumers. While Bernstein also trimmed forecasts for Kering and Hermes, it left estimates for Richemont unchanged, citing the "relative resilience" of its jewelry brands in mainland China and naming it the firm's "Best Idea" in the sector.