Luxury Shake-Up: Hermès Surpasses LVMH as Investors Turn Cautious on High-End Fashion

LVMH Stock Plunges After Disappointing Q1 Sales — Hermès Becomes Europe’s Most Valuable Luxury Brand

In a dramatic shift on Tuesday, Hermès overtakes LVMH to become Europe’s most valuable luxury goods company by market capitalization. The move came as LVMH shares plunged 7%, wiping billions off its market value after the fashion giant reported weaker-than-expected first-quarter results.

Once comfortably leading the sector, LVMH Moët Hennessy Louis Vuitton saw its valuation tumble to €246 billion, just below Hermès’ €247 billion, amid growing investor concern over the broader luxury retail outlook.

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🇺🇸 🇨🇳 Weak Demand from U.S. and China Hits LVMH

The Paris-based conglomerate, which owns global fashion titans such as Louis Vuitton, Dior, Tiffany & Co., and Sephora, reported a 3% sales decline in Q1 2025—far short of analysts’ expectations of 2% growth.

U.S. consumers have pulled back spending on cognac and beauty products, while sales momentum in China, a traditionally strong market for luxury, also remained sluggish.

📉 LVMH’s Exposure to Mid-Tier Luxury Triggers Worry

Analysts point to LVMH’s broader product portfolio—including entry-level luxury items—as a potential weakness in times of economic uncertainty. In contrast, Hermès, known for its ultra-premium Birkin and Kelly bags priced upwards of $10,000, continues to benefit from a highly loyal, ultra-wealthy clientele and a limited-supply strategy.

“LVMH’s mass appeal now seems to be its weak spot,” said GAM’s luxury fund manager Flavio Cereda. “Hermès’ disciplined growth and elite positioning are giving it an edge in a post-pandemic slowdown.”

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📊 Sector-Wide Luxury Sell-Off Intensifies

Tuesday’s market rout wasn’t limited to LVMH:

• Kering (owner of Gucci): down 2%
• Hermès: down 0.3%
• Richemont (Cartier): down 0.7%
• Prada: down 4.2%

With LVMH leading the decline, luxury stocks across Europe have now fallen sharply since the end of March. Shares in Burberry, Richemont, and Kering are all down over 13–14% over the past two weeks, while Hermès has dropped a more modest 5%.

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🚨 Analysts Slash Forecasts as Recession Fears Grow

Following the disappointing results, several financial institutions have lowered their outlook for the luxury sector:

• RBC downgraded LVMH’s 2025 sales projection from 3% growth to flat
• Deutsche Bank highlighted a return to 5% declines in LVMH’s key fashion and leather goods segment
• Bernstein cut its 2025 luxury sales forecast from +5% to -2%, marking what could be the industry’s longest downturn in over 20 years

This comes amid rising global recession fears, especially after new U.S. tariffs were announced by President Trump, creating further uncertainty for exporters and luxury brands dependent on international markets.

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🧠 What It Means for Investors and Forex Traders

The turbulence in luxury stocks is not just about fashion—it reflects larger macroeconomic concerns such as trade tensions, consumer spending slowdowns, and recession risk. For forex traders on DailyForex.pk, this signals potential volatility in EUR/USD and CHF pairs, as Europe’s luxury sector is a major economic pillar.

Keep an eye on earnings releases, tariff developments, and Chinese consumer sentiment, which remain key drivers for luxury-linked equities and currencies.

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📌 Final Take: Elite Luxury Stays Strong, But Broader Sector Faces Turbulence

Hermès may be winning the market cap race today, but the entire luxury sector is at a crossroads. As global consumers tighten their belts and trade conflicts intensify, brands with narrow, elite appeal like Hermès are thriving—while more diversified empires like LVMH must navigate a tougher road ahead.

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