As the global luxury sector contends with shifting trade dynamics and slowing consumer appetite, French conglomerate LVMH is doubling down on its U.S. manufacturing footprint. CEO Bernard Arnault has revealed plans to open a second production facility in Texas by 2027 — a move that signals both commercial optimism and calculated diplomacy.
This announcement comes at a time when LVMH is navigating a cocktail of economic headwinds. The company recently reported a 4% decline in second-quarter revenues, with its flagship fashion and leather goods division down 9%, missing market expectations. Demand fatigue, particularly in China and parts of Europe, has made even the most iconic brands more vulnerable than usual.
Still, Arnault is playing a long game. His 2019 opening of a Louis Vuitton workshop in Texas, during Donald Trump’s presidency, helped LVMH sidestep prospective tariffs on luxury imports. Now, with geopolitical tensions between the U.S. and EU reemerging — and Trump once again a potential occupant of the White House — Arnault is proactively lobbying for trade stability.
“I’m pushing as much as I can for us to reach an agreement with the Americans,” he recently told the Wall Street Journal, reflecting his hands-on approach to safeguarding LVMH’s U.S. exposure.
Internally, the luxury powerhouse is rebalancing. Longtime CFO Jean-Jacques Guiony has transitioned to lead LVMH’s wines and spirits arm, while Cecile Cabanis, who took over financial duties, remains bullish on a favorable trade resolution. She suggested a 15% tariff scenario — if enacted — could still be palatable for LVMH’s clientele, citing the enduring brand equity of marquee labels like Dior, Celine, Bulgari, and Louis Vuitton.
China, once the engine of luxury growth, is showing signs of life after a prolonged property crisis dented high-end consumption. A bold new Louis Vuitton store in Shanghai — styled like a giant ship — has reinvigorated interest, indicating that brand storytelling still resonates.
Yet challenges remain. The rise of aspirational but more affordable rivals like Coach and Ralph Lauren, coupled with fresh competition from edgier brands such as Miu Miu, is eroding LVMH’s dominance among younger luxury consumers. Add to that a string of supply chain scrutiny incidents — particularly involving Loro Piana’s cashmere operations — and the sheen of LVMH’s perfection has dulled.
Strategically, Arnault is staying the course. Despite Hermes overtaking LVMH as France’s most valuable public company earlier this year, the billionaire executive has moved to cement his leadership, securing shareholder approval to potentially remain CEO for another decade.
What Comes Next?
LVMH’s pivot to U.S. manufacturing isn’t just a supply chain hedge — it’s a geopolitical chess move. In a fractured global economy, luxury brands that can localize production, insulate against regulatory risks, and maintain brand desirability will thrive.
Arnault, ever the tactician, appears to be betting that luxury’s future may be made — quite literally — in America.
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