RBC Downgrades LVMH, Cites Weakening Luxury Demand and Macro Headwinds

RBC Capital Markets has downgraded LVMH Moët Hennessy Louis Vuitton, citing concerns that a weaker global macroeconomic environment and softening demand for luxury goods will weigh on the company’s growth. In a note on Tuesday, the brokerage lowered its rating to “sector perform” from “outperform” and slashed its 12-month price target to €475 from €575.

Lowered Expectations

The downgrade is underpinned by RBC's expectation that difficult market conditions will persist into fiscal 2027. The firm pointed to several factors weighing on consumer spending, including the Middle East conflict, higher oil prices, equity market volatility, and tighter monetary policy.

As a result, RBC has made significant cuts to its financial forecasts for the luxury giant:

• It lowered its fiscal 2027 earnings-per-share (EPS) estimate by 10% to €23.03, placing it 9% below the market consensus.
• The revenue forecast for fiscal 2027 was reduced by 4%, with RBC now expecting group organic revenue growth of 3.1%, compared to a consensus estimate of 4.6%.
• The key Fashion & Leather Goods division is projected to grow just 1% in fiscal 2027, well below the 4.1% expected by the Street.

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Margin Pressure and Near-Term Outlook

RBC also anticipates pressure on LVMH's profitability, forecasting a fiscal 2027 adjusted EBIT margin of 21.7%, which is 80 basis points below consensus. Analysts noted that LVMH’s high fixed-cost base leaves its earnings particularly sensitive to periods of weaker revenue growth.

For the upcoming third quarter, RBC forecasts group revenue of €18.30 billion, representing just 1% organic growth. The crucial Fashion & Leather Goods division is expected to see revenue decline by 2% organically, implying a sequential slowdown from the second quarter. The brokerage noted that while the U.S. and Japan drove growth in the first half of 2026, it expects U.S. growth to moderate with few catalysts for a strong recovery in other regions.