Bernard Arnault, Chief Executive of LVMH. / Photo gorick.com
On Tuesday, LVMH shares fell by 2.5 per cent, reports Bloomberg. The group’s market capitalisation fell to around €201 billion ($232 billion), causing the company to fall behind L’Oréal and drop out of the top 10 publicly listed companies in Europe for the first time since 2017.
“Those who claim that Europe has returned to its former position are mistaken – Europe has not returned: LVMH shows that its main growth driver – the luxury sector – has faltered,” said Vincent Juvins, chief investment strategist at ING in Brussels.
The decline is particularly striking when compared to the peak in 2023. At that time, LVMH became Europe’s most valuable company: its market capitalisation exceeded €900 billion, and its shares were trading above €900. Since then, the shares have lost around 55 per cent of their value. One of the main reasons was China, where demand for luxury goods has weakened significantly. A further blow to the sector was the cut in spending at major shopping centres against the backdrop of the conflict in the Middle East.
Problems have also intensified for Louis Vuitton — the group’s most profitable brand. In China, it found itself at the centre of a trademark dispute with a local tea company, which sparked a negative reaction from consumers. Against this backdrop, several brokers have downgraded LVMH’s ratings and revised their target prices for its shares.
Since the start of the year, the group’s shares have fallen by around 37 per cent, returning to levels seen during the pandemic when lockdowns forced shops to close worldwide. In terms of scale, the current decline is already comparable to LVMH’s losses during the global financial crisis.
The decline in LVMH’s share price has also hit the wealth of its largest shareholder. According to the Bloomberg Billionaires Index, Bernard Arnault dropped out of the top ten richest people in the world last week. All the places in the current top ten are held by Americans, most of whom made their fortunes in the technology sector.
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