Louis Vuitton China sales slide after Molly Tea trademark win sparks backlash

The dispute centred on Molly Tea's four-petal floral design, which was found to be too similar to the French label's signature monogram. The resulting anger on Chinese social media drove shoppers away from the LVMH-owned brand, according to people familiar with the matter.

Research firm JL Warren Capital tracked the fallout. Junheng Li, the firm's chief executive officer and head of research, said it continued to observe double-digit sales declines in August, with the drop easing from approximately 30% in July to an estimated 20-25%.

Louis Vuitton was the worst hit luxury brand in July and August, even as a wider downturn across the Asian market weighed on the entire sector.

China's importance to the group is substantial. Asia excluding Japan accounted for about 29% of LVMH's total revenue in the first half, while Chinese consumers make up around 30% of its total sales, according to UBS estimates. LVMH does not break out performance by brand, but UBS puts Louis Vuitton at roughly a quarter of group sales and about 60% of earnings before interest and taxes.

For years, China was the main engine of luxury demand, as rising wealth and disposable incomes fuelled spending by aspirational consumers and helped lift LVMH sales and shares to record highs in 2023. That run has now been undercut by an economic slump, with the added consumer backlash leaving little prospect of a near-term return to sales growth in the country.