LVMH stock consolidates at €515 as Hennessy exports to China plunge 24%

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LVMH stock consolidates

Highlights

- LVMH stock is trading 32% below its 52-week high, reflecting ongoing pressure from declining cognac exports, particularly to China.

- Hennessy sales dropped sharply as Chinese demand weakened and trade tensions intensified, with potential tariffs of up to 39% still unresolved.

- LVMH’s strong performance in fashion and jewelry continues to provide a stabilizing force for its broader portfolio.

The 50-day moving average sits near €497, while the 200-day moving average stands higher at approximately €578. This wide divergence signals that while short-term sentiment has improved, the stock remains in a long-term corrective phase. RSI (Relative Strength Index) is in neutral territory around 53, neither overbought nor oversold, pointing to a market lacking a strong directional catalyst.

LVMH’s technical resilience is partly explained by strong fundamentals. Its market capitalization stands near €260 billion, and the company maintains a forward P/E of approximately 22.5. Net margins hover above 13%, and the company generates over €13 billion in annual free cash flow, providing considerable flexibility for dividends, buybacks, and strategic investments. The luxury giant continues to benefit from brand strength in its core fashion, leather goods, and jewelry segments. However, the current drag from the wines and spirits division is creating a sector-specific ceiling on upside momentum.

LVMH stock price dynamics (June 2025 - August 2025). Source: TradingView

Adding to its technical setup, trading volume has shown signs of contraction over the past month, suggesting waning investor conviction as the stock consolidates. This declining volume during modest price recoveries often signals caution among institutional players. Options market data also shows a rise in implied volatility on near-term contracts, reflecting investor uncertainty around the upcoming earnings cycle and geopolitical risks, particularly in China.

Cognac exports slump as China tensions

The latest blow to LVMH’s wines and spirits business came from newly released export data showing French cognac shipments have dropped significantly. Total exports fell by 10.6% in value in 2025, and exports to China, a key growth market for LVMH’s Hennessy, plummeted 23.8% in value and 9.6% in volume. The downturn reflects weak consumer sentiment in China, compounded by Beijing's ongoing anti-dumping investigation into European brandy imports.

French cognac producers, including Hennessy, are currently negotiating with Chinese authorities to introduce a minimum import price mechanism aimed at avoiding tariffs that could reach 39%. However, no deal has been finalized. The threat of steep tariffs and weakened discretionary spending in China is forcing LVMH to reassess its sales expectations for Asia, which has traditionally been a driver of premium spirits growth.

The downturn is not isolated to LVMH. Pernod Ricard has initiated a restructuring plan to mitigate losses in its spirits division, while Remy Cointreau continues to flag soft Chinese demand despite a recovery in U.S. sales. The luxury drinks sector is clearly entering a phase of prolonged demand recalibration, and LVMH, despite its diversification, is exposed via its flagship Hennessy line.

Limited upside unless trade headwinds ease

In the short term, LVMH’s share price is likely to remain range-bound between €480 and €530 as investors weigh the resilience of its core fashion business against persistent headwinds in its spirits division. A lack of visibility on Chinese trade outcomes means any rally is likely to be capped until further clarity emerges.

In a base-case scenario, with steady performance in fashion and luxury retail, and no major deterioration in spirits sales, the stock could hover around €500 to €520 into Q4 2025. An upside scenario would require a resolution to the China tariff issue and signs of re-acceleration in premium spirits consumption. This could push LVMH stock back toward the €550–€600 range.

LVMH missed Q2 2025 EPS expectations with €11.42 versus €12.02 forecast, sparking an initial sell-off. However, investor confidence remained intact as the company maintained a strong 26.2% operating margin, nearly flat year-over-year.

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