Shining Less Bright: $245 Billion Selloff Casts Shadows on the Luxury Stock Market”

blog image

The luxury industry faces disappointment as the owner of Louis Vuitton and Christian Dior reports lackluster sales figures. A shudder reverberates through the industry, signaling a departure from previous stellar growth.

A Luxury Market Losing Its Luster and Changing Fortunes for LVMH

The luxury goods market had already been grappling with signs of a softening performance. China’s economic rebound lost momentum, and US consumer demand cooled. LVMH’s figures, while good, don’t reach the heights expected, contributing to a $245 billion market value loss for Europe’s top luxury 

Once the most valuable company in Europe, LVMH recently yielded that title to Danish drugmaker Novo Nordisk. CEO Bernard Arnault, who ranked as the world’s wealthiest person, has been surpassed by Elon Musk. The tides of fortune are shifting in the luxury realm.

Demand Stagnation and Spreading Weakness

LVMH’s results dash hopes of a robust demand recovery, particularly in China. The growth rate in Asia, excluding Japan, has dwindled from 34% to 11%, while Europe’s growth more than halved. These figures underscore the challenges luxury brands now face.

Europe’s Luxury versus US Tech

LVMH’s stock is no longer trading at a premium compared to technology companies but is now at a discount to the tech-heavy Nasdaq 100 Index. This shift raises questions about whether high-flying luxury stocks can rival the technology dominance seen in the US.

Read more