What happened
The market value for Hermès broke 80 billion euros for the first time in history after its stock price went up for 5 percent in the past week. At the same time, the market cap of the LVMH Group reached 203 billion euros, the second time it exceeded 200 billion euros. And the stock price of the Kering Group surged for 12.5 percent, bringing its market value to near 67 billion euros — the same pre-COVID-19 levels — indicating the strong rebound of the leading luxury groups.
Jing Take#
What's happening today has a resemblance to the 2008 financial crisis with the market price of luxury groups bouncing along with the crisis. From 2006 to 2008, the sales of LVMH and Kering went up for 21.6 percent and 7.8 percent respectively. Hermès led the surge from 1.5 billion euros to 1.9 billion euros with a 26 percent increment. But the French luxury titan has a reputation for being resilient, its signature Birkin bags are even considered a better investment than gold during the recent economic downturn. However, the vast popularity of the brand’s leather goods has potentially lead to a risk, which is an imbalanced financial structure due to the overreliance on selling them. Most luxury brands would love such a problem. For Hermès, however, the question now is how to create their next legend collection while having so much of their sales wrapped up in one product channel. Could it be their recently launched beauty line? Time will tell.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.