Hermès surpasses LVMH as most valuable luxury brand after sales miss

LVMH has lost its crown as Europe’s most valuable luxury goods company, overtaken on Tuesday by rival Hermès after a 7% plunge in its share price, following disappointing first-quarter results. The drop brought LVMH’s market capitalisation down to €246 billion, narrowly falling behind Hermès at €247 billion.

The shakeup reflects diverging investor sentiment in the luxury sector. While Hermès continues to thrive on the strength of its ultra-affluent clientele and restrained production strategy, LVMH is facing turbulence in both the U.S. and Chinese markets, with weakness particularly in beauty and spirits segments.

“Tuesday’s trading does reflect diverging performance and investor sentiment about the two companies,” said Jelena Sokolova, senior equity analyst at Morningstar. She pointed out LVMH’s broader exposure to entry-level luxury as a potential liability amid global economic uncertainty.

LVMH’s first-quarter sales fell 3%, underperforming expectations of a 2% gain, with its core fashion and leather goods unit, home to Louis Vuitton and Dior, posting a 5% decline. That reversal follows a post-pandemic boom in luxury consumption, which analysts now say may have reached its limits.

The sector as a whole also saw red. Shares of Kering, Richemont, Prada, and even Hermès were down during Tuesday’s trading session, with LVMH leading the decline. Bernstein recently slashed its 2024 luxury growth forecast from 5% growth to a 2% contraction, marking what could be the sector’s worst performance in over two decades.

Trump’s newly announced tariffs have only added to investor jitters, fuelling recession fears that could weigh further on discretionary spending, particularly in the U.S., one of LVMH’s largest markets.

As Apple and other bellwether companies signal resilience amid geopolitical headwinds, LVMH’s stumble highlights the vulnerability of luxury players to macroeconomic shifts and changing consumer behaviour.