What happened
On January 17, LVMH shares rose to a record high, granting the owner of Louis Vuitton, Christian Dior, and Tiffany & Co. a market capitalization of €400 billion (434 billion) for the first time. This solidifies the group’s status as Europe’s most valuable company, after first claiming the title back in 2021 when LVMH eclipsed Nestle with a market capitalization of around €264.6 billion (319.4 billion).
The Jing Take
With news of China reopening its borders and welcoming foreign investment, LVMH isn’t the only one benefiting. Rival luxury house Richemont’s shares were up 1.4 percent upon the reopening announcement, while Burberry’s rose 2.5 percent to their best level since January 2020. Both companies are optimistic about the market’s recovery — despite reporting tanking sales during the quarter ended December 31 — as the Lunar New Year holiday approaches near the end of January.
While the mainland’s relaxation of zero-COVID policies has certainly given luxury names a boost, it’s not the only driver of LVMH’s growth. In October, the French conglomerate beat analyst expectations when its fashion and leather goods division rose 22 percent to €9.69 billion (10.4 billion), driven by new products under Louis Vuitton, the reopening of Christian Dior’s Avenue Montaigne flagship in Paris, and strong progress of ready-to-wear at Celine. On this note, LVMH naturally benefits from its extensive ecosystem of brands — 75 houses in six different sectors — most recently adding jewelry group Pedemonte Group to its roster.
Whether or not LVMH shares will continue to skyrocket at this pace remains to be seen, especially after China fully reopens and revenge shopping tendencies taper out. There are also concerns from analysts that its stock is overbought. Regardless, the luxury titan is not getting comfortable at the top, announcing a major reshuffle of top management earlier this month — including the appointment of LVMH chairman Bernard Arnault’s daughter, Delphine Arnault, and Dior’s Pietro Beccari as the new heads of Christian Dior and Louis Vuitton, respectively — a move that could bring fresh growth for its storied labels.
Although LVMH still falls behind behemoths like Apple (worth over 2.1 trillion) on the list of the world’s most valuable companies, its success further separates it from competitors like Hermès and Richemont, with market caps of 183 billion and 83 billion, respectively. In other words, LVMH’s luxury reign is only beginning.
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.