The market value of Hermès briefly exceeded that of LVMH

In the world of luxury, the story of Hermès and LVMH has always been one of the most fascinating and competitive. And today, a new chapter has been added: after LVMH’s disappointing results which led to an 8.4% drop in the group's share value, Hermès has surpassed LVMH's market capitalization for the first time. Now the mega-group has once again slightly overtaken Hermès – but it is telling that a relatively small brand compared to the commercial titan finds itself, so to speak, in the same heavyweight category. On Tuesday 15th, in fact, Hermès’ valuation reached €243.65 billion, briefly surpassing LVMH’s €243.44 billion, making the historic Dumas family brand the most valuable company within Paris' CAC40 index. The causes of LVMH’s struggles are well known: reduced demand from China and the USA, as well as, of course, the trade war between the United States and China. Not that Hermès has been immune to the stock market crisis – quite the opposite. The brand is far from the high stock price reached last February 14, and had a relatively bad trading day on April 7, five days before the tariff announcement, although it now seems to be recovering. Still, its relative resilience amid a macroeconomic storm causing difficulties for much larger groups is remarkable. The market cap overtake makes even more sense considering the two companies were locked in a bitter battle for control of the brand when Arnault tried to buy Hermès over ten years ago.

The rivalry between the two companies has historical roots, dating back to 2010 when Bernard Arnault attempted to secretly acquire increasing shares of Hermès in an effort to gain a majority stake. This attempt sparked a strong reaction from the Hermès family, which united to block the operation by restructuring the company. After a series of legal events and aggressive actions, LVMH was forced to sell its shares, and Hermès remained independent – an episode that was not just a hostile takeover attempt but ended up permanently altering the brand’s management structure. In any case, in 2024, LVMH recorded sales of €84.7 billion and an operating profit of €19.6 billion. Hermès, although much smaller in size, posted €15.2 billion in sales and €6.2 billion in operating profit. Clearly lower figures than the LVMH giant, but proportionally, the small French brand maintained significantly higher profit margins with much more stable growth.

It is now well known that Hermès’ artisanal model, whose products are not subject to artificial scarcity but are genuinely hard to purchase – and very expensive – while still offering options for every price range (the most emblematic case being the mini Twilly scarf), is one of the healthiest in the entire fashion industry. The scarcity of iconic products like the Birkin or Kelly has given the company significant pricing power, a key advantage contributing to its steady growth. LVMH, on the other hand, faces what analysts on BoF call the "conglomerate discount", meaning a lower valuation of its shares compared to those of individual brands such as Louis Vuitton. While the latter generates massive profits, a completely different brand like Sephora has lower margins, which may have contributed to the pressure on the conglomerate's overall value. The performance of LVMH’s first quarter, which posted lower-than-expected results in fashion and leather goods, has highlighted the group’s challenges – so much so that some suggest breaking up Arnault’s empire into separate macro-divisions.