Louis Vuitton's China sales slide after Molly Tea trademark backlash
The trip by chief executive Pietro Beccari to assess the fallout is now expected to delay his planned handover to deputy Damien Bertrand.
Louis Vuitton's China sales fell by an estimated 30% in July and by 20 to 25% in August, according to research firm JL Warren Capital, after a trademark victory over a local tea chain triggered a patriotic backlash. LVMH's flagship label was the worst hit of any major luxury brand in the country over those two months.
The dispute centred on Molly Tea, whose four-petal floral logo Louis Vuitton argued too closely resembled its own monogram. A Chinese court agreed and ordered Molly Tea to pay CNY 10.3 million, roughly $1.5 million, a ruling the tea chain now plans to appeal, according to Global Times.
Social media users defended Molly Tea, with some arguing its design echoed a Tang Dynasty baoxiang flower pattern predating any French trademark. Other posts said it was not right for a house of Louis Vuitton's size to sue a small local chain it does not directly compete against for custom.
How the numbers compare across the sector
Junheng Li, JL Warren's chief executive and head of research, said declines narrowed through August but remained in double digits, driven partly by a quieter than usual Chinese Valentine's Day on 19 August. That gifting moment ranks second only to Chinese New Year for luxury retail spending in the country.
Rivals fared better but were not spared. Gucci's China sales slid 20% in July and 10% in August, JL Warren estimates, while Hermès dropped roughly 5% in July and 13% in August; Kering and Hermès both declined to comment on the figures.
Louis Vuitton is the French house behind the monogrammed Neverfull canvas bag and a broader range of leather goods, ready-to-wear and footwear; it is within LVMH, the conglomerate built from the 1987 merger of the fashion house with Moët Hennessy.
Louis Vuitton alone generates about a quarter of LVMH's group sales and around 60% of its earnings before interest and taxes, UBS estimates, making any China wobble at the label disproportionately visible to the wider group's own reported results.
Asia excluding Japan accounted for about 29% of LVMH's total first-half revenue, and UBS puts Chinese consumers at roughly 30% of the group's total sales. LVMH shares have fallen more than 36% this year, back to pandemic-era lows, while Hermès is down about a third and Kering almost 23%.
What Louis Vuitton did during the backlash
At the height of the controversy Louis Vuitton's accounts on Chinese platforms Douyin, Weibo, where it has more than 11 million followers, and Xiaohongshu went quiet, with no official announcement of a planned Shanghai event in late July.
Chief executive Pietro Beccari and deputy chief executive Damien Bertrand travelled to China at the end of July to assess the situation on the ground, people familiar with the matter told Bloomberg News.
Bertrand was named Louis Vuitton's deputy chief executive last year, and Beccari added the role of chief executive of LVMH's fashion group, which also includes Celine, Loewe and Fendi, earlier this year. The trouble at Louis Vuitton means a planned handover of the sole chief executive role to Bertrand will likely now be delayed, people familiar with the matter said.
LVMH chief financial officer Cecile Cabanis addressed the case on a 27 July analyst call, calling intellectual property "an absolute key asset for us" and saying the group "diligently" protects its brands. Robert Wu, chief executive of Shanghai-based data firm Baiguan, said winning in court and with regulators does not guarantee winning public opinion in China.
Signs of a thaw have since appeared. Taiwanese singer Ouyang Nana and Chinese Olympic snowboard champion Su Yiming attended a new Louis Vuitton store opening this month in Changchun, in northeast China, according to the brand's own social media posts.
JL Warren now expects a smaller China decline of around 13% this month, suggesting the worst of the backlash has passed. HSBC analysts led by Anne-Laure Bismuth downgraded LVMH to hold this week, calling the social-media reaction "temporary" but flagging a hit to third-quarter China sales.
The episode is part of a broader Chinese slowdown that predates the Molly Tea case, driven by a weaker economy, a government crackdown on conspicuous spending and local efforts to reclaim tax revenue from luxury retail, a dynamic we have tracked across China's wealth tax push and its effect on the wider luxury sales slump.
That earlier softness is why JL Warren frames Louis Vuitton's numbers as an amplification rather than an isolated shock, layering a reputational crisis on top of demand that was already thinning across the sector before the lawsuit ever became public.
Why patriotic backlashes keep hitting Western brands
Chinese patriotic sentiment has previously damaged Nike, Adidas and H&M, and Dolce & Gabbana's sales suffered for years after a 2018 advertising campaign was judged insensitive by local shoppers. Louis Vuitton's case differs in origin, a trademark dispute rather than a marketing misstep, but the commercial mechanism, an online backlash translating directly into store traffic, is the same.
We have covered LVMH's leadership moves elsewhere in its portfolio, including the promotion of a Balenciaga executive into the group's beauty division, and its brands' pushes abroad, such as Celine's new Beverly Hills flagship built on what it calls strong American momentum. Louis Vuitton itself has also branched beyond fashion this year through a Porsche 911 collaboration.
Our wider map of luxury conglomerates has noted that category dominance rather than breadth defines the tier below LVMH, Kering and Richemont, a reminder of how much of the group's own earnings depend on one label holding its footing in a single, volatile market.
No source has disclosed a firm timetable for Bertrand's promotion to sole chief executive, nor has LVMH published a breakdown of Louis Vuitton's standalone China revenue for the third quarter. JL Warren's September estimate, a roughly 13% decline, is the most recent figure available and points to a gradual recovery rather than a resolved crisis.
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