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Hermès exceeded LVMH to become the most precious luxury company in the world on Tuesday, after the actions of the owner of Louis Vuitton fell on the back of disappointing results in the first quarter.
In a bruised morning Lvmh fell 7.5%, sending the group’s market capitalization to 245.4 billion euros.
The shares of Hermès, the manufacturer of Birkin and Kelly bags, fell by only 0.4%, which gives him a market capitalization of 247 billion euros.
The luxury industry has struggled to follow a pandemic boom while consumers in the middle class brake spending and the Chinese economy waves, the factors that are now aggravated by Donald Trump’s aggressive trade war.
The results of the first quarter of LVMH, published late Monday, showed that sales of its key fashion division and leather items have dropped 5%, well below the 1%growth analysts.
On the other hand, Hermes“An ultra-rich clientele, carefully calibrated exclusivity and closely controlled production have enabled it to resist the recent slowdown than its rivals.
However, other luxury stocks were harder Tuesday, Prada lowering 4.2% and Kering down 1.4%. The actions of L’Oréal and Puig also dropped after the LVMH results referred to a broader slowdown in beauty.
Hermès regularly closed the gap of the market value with LVMH. Its customers are ready to sit on a waiting list for months, sometimes years, to get their hands on one of the group’s coveted Kelly bags, which sell more than € 8,000. Hermès bags often report even higher prices on the resale market.
This exclusivity is reflected in the assessment of the company. Hermès’ actions are negotiated at 50 times the profits, a multiple much higher than any other name in luxury.
“Hermé undoubtedly benefits from the highest pricing power … due to its unprecedented desirability of the brand,” said Carole Madjo, analyst at Barclays, who added that Hermé should not increase prices as much as her competitors to compensate for the impact of Trump’s prices on her profit margins.
The CEO and president of LVMH, the French billionaire Bernard Arnault, built the group in one covering more than 80 brands, producing handbags, jewelry and high -end spirits.
Hermès, on the contrary, remained a single brand group. In 2010, Arnault secretly accumulated participation in the company, in the hope of bringing him into his stable, only for his advances postponed by the Board of Directors of Hermès.
The turmoil in the luxury industry in the broad sense intervenes while Trump launched the scanning “Reciprocal” prices Of dozens of business partners, a decision that convulted the markets and shook the confidence of American consumers.
Earlier this month, the US President announced 20% samples from EU imported goods. This rate was then reduced to 10% as part of a 90 -day break on the highest rates. The prices between the United States and China are much greater than 100%, which raises a global recession.
The prices, which were more aggressive than what was widely expected, led analysts to Bernstein and HSBC last week to reduce their expectations for luxury recovery in the second half.
Citigroup analyst Thomas Chauvet said that due to the economic uncertainty generated by Trump’s prices, “it is difficult to build a credible scenario” in which revenues in LVMH and in the luxury sector have overall improved in the coming quarters.
