• by Sarah Mahoney  @mahoney_sarah, April 15, 2025

Hermès briefly overtook LVMH as the world’s most valuable luxury company after weak quarterly results sent shares of the French conglomerate tumbling.

The news sent shockwaves through the $400 billion luxury sector, which analysts now say could shrink by 2% this year, a sharp reversal from earlier predictions of growth.

LVMH reported a 3% decline in organic revenue to about $23.1 billion, with its core fashion and leather goods segment falling 5%. Wines and spirits sank 8%, and other divisions — including selective retail (Sephora), perfumes and cosmetics — were flat. Watches and jewelry eked out a 1% gain.

While LVMH maintains a confident outlook — “focused on the development of its brands,” per the earnings statement — analysts aren’t so sure. RBC told Bloomberg that the report is likely to “amplify investor concerns,” suggesting a tougher trading environment across the luxury landscape.

Hermès, meanwhile, is expected to announce earnings later this week. For now, investors rewarded that company’s smaller, more insulated model, pushing its market cap temporarily above LVMH’s.

Citi analysts, quoted in the Wall Street Journal, warned that LVMH’s results would likely “set a negative tone” for the luxury earnings season, especially with few details about how the company plans to mitigate tariff risks.

Those tariffs loom large. Bloomberg quoted LVMH’s CFO calling the trade situation “unknown territory.” While ultrawealthy consumers may continue to spend, Barron’s noted, LVMH acknowledged that the sector’s “aspirational” shoppers — the less affluent buyers who drive volume — are more vulnerable to economic slowdowns.

The impact isn’t limited to LVMH. Shares in Prada, Burberry, Ferragamo, Richemont, and Kering, parent of Gucci, also dipped in response to the news.

And last week, Reuters reported that a Bernstein analyst, who had previously predicted 5% growth in the global luxury market, now forecasts a 2% decline, an unhappy plot twist for a sector that had grown used to resilience.