LVMH's Watch Overhaul Is Only Half the Story as Fashion Sales Keep Sliding
Published on 10/29/2026 at 12:20 | Editorial boerse-global.de
LVMH has set the clock running on a strategic reset at its Zenith watch brand, but the group's real test sits elsewhere: a fashion and leather goods division that is still shrinking even as the wider business edges forward.
The Paris-based luxury giant confirmed that consultations with employees over a strategic repositioning at Zenith have begun, with the brand aiming to concentrate on especially high-end watchmaking. According to media reports, roughly 100 of 196 positions at the Le Locle production site could be affected, with about 100 more roles potentially at stake internationally. Those talks represent an ongoing process of negotiation, not a completed or executed round of job cuts — a distinction that matters when weighing what the announcement actually signals.
Filings Offer Transparency, Not a Turnaround
The Zenith news landed alongside routine regulatory housekeeping. On Tuesday, LVMH filed a notification of share transactions with the French financial regulator AMF, covering trades from 19 to 23 October and published under regulated company information. It follows a similar disclosure on 20 October covering the prior reporting period.
Separately — and not to be confused with the transaction filings — board member Frédéric Arnault reported on Monday the receipt of 345 performance-linked shares at a price of EUR 0 per share. That is an award of variable compensation, not a purchase funded with personal capital, and the accompanying AMF notice sits under the reporting party's own responsibility without having been reviewed by the regulator. The distinction carries weight: a performance-based allotment tells a different story than a director putting his own money into the stock.
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A Group Growing, a Flagship Division Retreating
The scale of the operational challenge was laid bare in results published about two weeks ago. For the third quarter of 2026, LVMH posted revenue of EUR 18.504 billion, with organic growth of 1 percent. Within that total, fashion and leather goods — the group's bellwether — recorded an organic decline of 5 percent.
LVMH pointed to a less buoyant environment in China, a weakness Reuters linked to a deterioration in Chinese consumer sentiment. The headline group growth therefore masks sharp divergence beneath the surface. For investors, the question is not simply whether LVMH is expanding overall, but whether the troubled division is finding a floor.
Two Scenarios, One Decisive Variable
The more hopeful path starts with the drag from Chinese demand easing. Should consumer confidence recover and feed through to LVMH's businesses, the gap between the positive group trend and the weak fashion unit could narrow — a far more meaningful signal than a standalone restructuring announcement. At Zenith, a sharper focus on top-tier watchmaking could deliver a clearer market position, though whether that translates into economic benefit has yet to be demonstrated. Beginning consultations proves the company is engaged with strategic change, not that the change will pay off.
Brand-building efforts form part of that same picture. During the Journées Particulières held from 16 to 18 October, LVMH houses opened their doors and put artisanal expertise on display. Such events can strengthen ties to the brand, but they are no evidence of stronger demand or higher earnings.
The less favourable scenario has Chinese consumers staying on the sidelines, leaving fashion and leather goods to cap any recovery. In that case, modest organic growth at group level would fall short of confirming a durable shift in trend. Add to that the execution risk at Zenith: the intended repositioning would still have to prove itself commercially, and the consultations now under way yield neither assured savings nor improved profitability. The roles potentially affected should not be mistaken for measures already carried out.
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Here lies the serious counterargument to the recovery thesis — supply-side adjustments cannot automatically offset weak demand. Even a strategy implemented with discipline could fall short of expectations, and any assessment of progress should weight operating results more heavily than the scale of announced changes.
What to Watch, and What to Ignore
Until the fashion and leather goods weakness visibly abates, a broad recovery remains a conditional prospect. Should demand improve and the business follow, the bullish reading gains substance; should demand deteriorate further, it comes under additional pressure. One date sits in the investor calendar: 30 November 2026 is the last trading day with entitlement to the dividend. That concerns dividend rights only and offers no proof of an operational turning point.
Two threads therefore deserve to be tracked separately — how the Zenith consultations unfold, and how revenue at fashion and leather goods develops. The first shows how LVMH goes about change. The second decides whether any recovery extends beyond individual measures.
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