“Hermès overtakes LVMH to become the most valuable luxury goods companyLVMH shares fell while Hermès held steady, pushing the latter into the top spot. Weak LVMH sales sparked a luxury stock sell-off.”, — write: unn.ua
www.hermes.com
DetailsIn a difficult morning for the luxury goods sector, in which companies changed places several times, LVMH shares listed on the Paris Stock Exchange fell by 7.5%, resulting in a decrease in the group’s market capitalization to EUR 245.3 billion.
Shares of Hermès, the manufacturer of Birkin and Kelly bags, fell by only 0.4%, bringing its market capitalization to EUR 247.1 billion.
The luxury goods industry has faced difficulties after the pandemic boom, as middle-class consumers curb spending and China’s economy weakens, and these factors are now being exacerbated by Donald Trump’s aggressive trade war, the publication writes.
LVMH’s first-quarter results, released late Monday, showed sales in its key fashion and leather goods division fell 5 percent, well below analysts’ expectations of 1 percent growth.
In contrast, Hermès’ super-rich clientele and tightly controlled product releases have allowed it to weather the recent slowdown better than its competitors, the publication notes.
LVMH’s weak quarterly sales triggered a wider sell-off of luxury stocks on Tuesday: Prada fell 4.2 percent and Kering fell 1.4 percent. Shares of L’Oréal and Puig also fell after LVMH’s results hinted at a broader slowdown in the cosmetics industry, the publication writes.
Fifteen years after the French conglomerate tried to acquire its smaller competitor in a “secret raid,” Hermès, as indicated, has gradually narrowed the gap with LVMH.
The turmoil in the luxury goods industry came after Trump imposed massive “reciprocal” tariffs on dozens of trading partners, which shook markets and undermined consumer confidence in the United States, the publication notes.
Earlier this month, the US president announced 20 percent tariffs on goods imported from the EU. The rate was later reduced to 10 percent as part of a 90-day pause on the highest tariffs.
The tariffs, which proved more aggressive than expected, prompted analysts at Bernstein and HSBC to lower their expectations for a recovery in the luxury goods market in the second half of the year last week.
Citigroup analyst Thomas Chauvet said that due to the economic uncertainty caused by Trump’s tariffs, it is “difficult to build a plausible scenario” in which the revenues of LVMH and the entire luxury goods sector as a whole will improve in the coming quarters.
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