2025-04-16 10:30
publication
2025-04-16 10:30
Hermès overtook LVMH, becoming the most valuable luxury company in the world, after the owner of the Louis Vuitton brand owner fell violently in response to disappointing results for the first quarter.
On April 15, it was a difficult day for the luxury goods industry. The shares of LVMH listed in Paris fell by 7.9%, reducing its market capitalization to EUR 246.5 billion, and thus the lowest level from November 2020.
In turn, the actions of the Hermès company – a producer of the famous Birkin and Kelly handbags – ended the day with virtually unchanged, which gave the company capitalization at the level EUR 248.1 billion.
Luxury under pressure. Weakening demand and trade war are reflected in the results of the industry
The luxury industry is struggling with the problems of the boom during the Covid-19 pandemic, because middle-class consumers limit expenses, and the Chinese economy is weakening. Currently, these difficulties are still deepening Aggressive trade war run by US President Donald Trump.
LVMH financial results for the first quarter, published late in the evening on Monday, showed that sales in the key segment of fashion and leather products dropped by 5%, while analysts expected an increase of 1%.
For comparison Hermès is doing much better than the competitionthanks to the ultra -trade clientele, carefully cultivated exclusivity and strict control over production.
Declines in the industry. Only Hermès is based on a market discount
On Tuesday, April 15, other luxury companies recorded even larger declines. Prada shares fell by 4.2%, and keering by 4.8%. L'Oréal and Puig's actions also got cheaper after LVMH's results also pointed to a wider slowdown in the cosmetics segment.
Hermès was systematically approaching in terms of market value to LVMH. The company's customers are ready to wait for months or even years, for the possibility of buying desired Kelly bags that cost from 8,000 euro up Prices of these bags on the secondary market can be even higher.
This exclusivity can also be seen in the valuation of the company-Hermès shares are recorded after 50 times the expected profits, i.e. much higher than any other luxury brand.
“Financial Times“Quotes Carole Madjo, an analyst from Barclays, who stated: “Hermès undoubtedly enjoys the greatest price power thanks to the exceptional attractiveness of his brand.” The woman added that the company would not have to raise prices as aggressively as competitors to balance the impact of Trump's duties on margins.
LVMH versus Hermès. Two strategies, one crisis
The president and chairman of the supervisory board of LVMH, French billionaire Bernard Arnault, created a group of over 80 marks, including bags, jewelry and high -class alcohol.
On the other hand Hermès remained a single-marriage group. In 2010, Arnault secretly gathered shares in the company, hoping for its acquisition, but Hermès' management firmly rejected his treatments.
The confusion in the luxury goods industry coincided with the introduction by Trump by extensive mutual duties on dozens of trading partners. This movement shook markets and weakened the trust of American consumers.
At the beginning of the month, the US President announced 20 % duties on goods imported from the EU. Later, this rate was reduced to 10% as part of 90-day suspension of the most severe duties. Dutch between the USA and China reaches over 100%, which causes concerns about the global recession.
These duties – much sharper than expected – prompted Bernstein and HSBC analysts to drastically reduce forecasts to reflect the market of luxury goods in the second half of the year.
The Citigroup analyst, Thomas Chauvet, said that due to the economic uncertainty caused by the Trump tariffs, “it is difficult to create a reliable script today”, in which LVMH revenues and the entire luxury industry will improve in the upcoming quarters.
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