The US president will impose additional 10% tariffs from February 1 on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and the UK.

This rate will rise to 25% on 1 June if no agreement is reached on Greenland, a territory sought by the United States.

In Morgan Stanley's research note, the US bank downgraded LVMH shares to Equal-weight from Overweight, while maintaining its target price unchanged at €635. "The group is viewed as being in a better position than it was a year ago. Its two flagship brands, Louis Vuitton and Dior, are regaining positive momentum, which should translate into fourth-quarter 2025 results above consensus expectations. Despite this recovery, we see more downside than upside risk to 2026 earnings-per-share (EPS) estimates,” Morgan Stanley said. 

In detail, the bank now forecasts 2026 EPS of €23.6 (previously €24). It believes the annual consensus is more likely to be revised down than up in the coming weeks (its estimate is 2.6% below the VA consensus of €24.2).

Major headwinds

LVMH will also face major headwinds. Its future performance will be weighed down by adverse currency effects, the impact of tariffs (estimated at around
-150 basis points on the Fashion & Leather Goods division margin in 2026) and continued pressure on the Wines & Spirits division.

Morgan Stanley also notes that 2025 will be the second consecutive year of contraction for the personal luxury goods sector (-2.5% in 2024 and -3.6% in 2025, according to its estimates), a rare occurrence for an industry that benefits from powerful structural drivers. Over this period, sales were badly hit by the contraction in Chinese demand, as well as the industry's inability to expand its total addressable market (TAM: Total Addressable Market. This is a term meaning the maximum theoretical revenue a company could generate if it captured 100% of its target market) by recruiting from the upper middle class, as it had consistently done for many years (partly due to the very sharp price increases during the COVID period).

Nevertheless, since H2 2025, the US bank has observed a renewed correlation between luxury spending in the US and the (massive) wealth effect, along with a slow but clear improvement in demand from Chinese nationals. As these two countries together account for around 55% of global demand for personal luxury goods, this has translated into an improved sales trajectory for LVMH since the summer. 

This Thursday, LVMH will publish its Q4 and FY 2025 results. Last October, the group chaired by Bernard Arnault announced 1% organic sales growth for Q3 2025, at €18.28bn. LVMH returned to growth over the period after declines in revenue in Q1 (-3%) and Q2 (-4%).