Hermès overtakes LVMH to become Europe's largest luxury company

(Source: AFP/VNA)

LVMH, which owns luxury fashion brands such as Louis Vuitton, Dior, Tiffany & Co. and cosmetics chain Sephora, missed revenue expectations in the first quarter of this year, as U.S. consumers cut back on spending on cosmetics and cognac, while sales in China remained weak.

Specifically, LVMH's first-quarter 2025 revenue decreased by 3%, contrary to analysts' expectations of 2% growth.

This signals another difficult year ahead for the luxury industry, especially as US President Donald Trump announces a series of new taxes that have investors worried about the risk of a global recession.

LVMH shares plunged 7%, bringing the group's market capitalization down to 246 billion euros, below Hermès' 247 billion euros.

RBC analyst Piral Dadhania said the results showed “an increasingly challenging business environment for the entire luxury industry.”

He has lowered LVMH's revenue growth forecast for this year from 3% to zero.

While market valuations can fluctuate over time, the April 15 trading session “clearly reflects the difference in performance and investor sentiment toward the two companies,” said Jelena Sokolova, senior equity analyst at Morningstar.

She said LVMH has a broader reach into the mass luxury segment, while Hermès caters to a wealthier clientele — a factor that makes the company more resilient to the overall industry downturn.

Hermès - famous for its Birkin and Kelly handbags that cost up to $10,000 each - keeps tight control over production, only increasing output by about 6-7% per year.

Mr. Flavio Cereda - luxury goods investment strategy manager at GAM - commented that Hermès surpassing LVMH reflects the reality of "a prolonged post-COVID-19 period."

LVMH’s brands have gained unprecedented market share in the post-pandemic boom, but he also said “short-term pain is certain,” with Louis Vuitton, which has focused more on the mid-range, now a point of concern for investors.

Investors had previously hoped that the luxury industry would recover in 2025. However, trade tensions have made this outlook fragile.

Deutsche Bank said the brief improvement at the end of 2024 could be a temporary phenomenon, as LVMH's main fashion and leather goods business - home to brands such as Louis Vuitton and Dior - returned to a 5% revenue decline in the last quarter./.

According to VNA

Source: https://baothanhhoa.vn/hermes-vuot-lvmh-thanh-cong-ty-xa-xi-lon-nhat-chau-au-245765.htm