Cost Discipline And Digital Transformation Will Offset Luxury Market Downside

Key Takeaways

• Weakness in key markets, overstock, and underused capacity are squeezing margins and may worsen with rising sustainability costs and limited scale advantages.
  
• Lagging digital strategy and frequent leadership changes threaten brand value, hinder competitiveness, and restrict both revenue growth and margin recovery.
  
• New creative leadership, retail optimization, cost-cutting, and digital expansion are revitalizing brand demand, operational efficiency, and profitability while providing resilience against market fluctuations.

Catalysts

Operates as a couture house for men and women in Europe, the Middle East, Africa, North America, Greater China, and other Asian countries.

• The persistent decline in group-wide revenue (down 22% YoY in H1 2025), alongside macroeconomic weakness in EMEA and Greater China, suggests that Lanvin Group's addressable market may continue to face long-term pressure from rising income inequality and a potential societal shift away from luxury consumption, which could lead to further revenue contraction.
  
• Ongoing underutilization of production capacity, liquidation of prior season inventory, and continued markdown activity have already compressed gross profit margins and indicate that higher regulatory demands on sustainability and ESG could result in structurally higher costs, negatively impacting future margins and profitability.
  
• The group's relatively small scale and continued negative adjusted EBITDA (–€52 million in H1) signal persistent operational inefficiencies and limited ability to absorb sector cost inflation, which raises the risk of shareholder dilution through future rights issues and likely continued pressure on earnings per share.
  
• Lanvin Group's limited direct-to-consumer (D2C) and digital capabilities, with D2C and e-commerce only showing sequential (not sustained YoY) recoveries, leave the company vulnerable to intensifying competition from digital-native fast fashion players, likely capping their long-term revenue growth and constraining net margin expansion.
  
• Efforts to reposition the brand portfolio through frequent leadership changes and creative transitions, while costly, increase the risk of brand dilution and inconsistent execution; this may erode pricing power, pressure gross margins, and limit the sustainability of any short-term growth rebound.

Lanvin Group Holdings Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Lanvin Group Holdings's revenue will grow by 5.9% annually over the next 3 years.
• Analysts are not forecasting that Lanvin Group Holdings will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Lanvin Group Holdings's profit margin will increase from -62.2% to the average US Luxury industry of 5.8% in 3 years.
• If Lanvin Group Holdings's profit margin were to converge on the industry average, you could expect earnings to reach €19.9 million (and earnings per share of €0.17) by about September 2028, up from €-181.1 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 10.9x on those 2028 earnings, up from -1.3x today. This future PE is lower than the current PE for the US Luxury industry at 20.5x.
• Analysts expect the number of shares outstanding to decline by 0.32% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 13.58%, as per the Simply Wall St company report.

Lanvin Group Holdings Future Earnings Per Share Growth

Risks

• The appointment of new creative leaders and high-profile launches for Lanvin and Sergio Rossi have already driven strong D2C revenue rebounds in Q2 (Lanvin +46%, Sergio Rossi +16% QoQ), indicating the potential for revitalized brand momentum and renewed consumer demand, which could translate into sustained revenue growth and improved margins if successful.
  
• Strategic rightsizing of the retail footprint-closing 29 underperforming stores and focusing on flagship locations-improves operational efficiency and enhances brand equity, laying a foundation for higher productivity per store and better long-term profitability.
  
• Group-wide cost discipline and aggressive G&A expense reductions (e.g., Wolford -27%, Sergio Rossi -25%, St. John -35%) are showing visible improvements, directly supporting EBITDA margin recovery and strengthening the path to profitability.
  
• Digital transformation and expanded direct-to-consumer channels are driving sequential improvements (e.g., e-commerce rebound in North America for Lanvin), showing Lanvin Group Holdings is leveraging the long-term industry trend toward digitization, which can boost net margins and accelerate top-line growth.
  
• The demonstrated resilience of brands like St. John (revenue nearly flat and core North America market +4%, plus 11% wholesale growth with key accounts such as Nordstrom) highlights the ability to withstand market volatility and maintain steady gross margins, providing an earnings stabilizer during sector downturns.

Valuation

• The analysts have a consensus price target of $1.502 for Lanvin Group Holdings based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €345.4 million, earnings will come to €19.9 million, and it would be trading on a PE ratio of 10.9x, assuming you use a discount rate of 13.6%.
  
• Given the current share price of $2.26, the analyst price target of $1.5 is 50.5% lower. Despite analysts expecting the underlying buisness to improve, they seem to believe the market's expectations are too high.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.