Hermes Overtakes LVMH to Become the World’s Largest Luxury Goods Company by Market Value

Hermès has surpassed LVMH, which once attempted to acquire it, in market value, becoming the highest-valued company in France’s CAC40 index and rising to the third-largest listed company in Europe.

According to Bloomberg, Hermès’ market value reached €249 billion (about $281 billion) at the Paris close on Tuesday, surpassing LVMH’s €244 billion for the first time. This “flip” coincided with LVMH’s disappointing first-quarter financial results announcement, leading to a 7.8% plunge in its stock price due to concerns over weak demand in China and the United States, and escalating trade tensions.

Morningstar analyst Jelena Sokolova pointed out, “During uncertain times, consumers tend to choose high quality and a sense of security, and Hermès is a representative in the luxury goods sector, while LVMH is more cyclical.”

This milestone also symbolizes Hermès’ success in sticking to its independent strategy. In 2010, LVMH’s CEO Bernard Arnault quietly acquired a stake in Hermès, triggering a backlash from the Hermès family, ultimately forcing him to sell his shares and end the acquisition attempt.

Although its revenue and scale are far smaller than LVMH, Hermès has maintained strong growth in the luxury goods market through highly exclusive and limited strategies. In 2024, LVMH had revenues of €84.7 billion and operating profits of €19.6 billion, while Hermès had revenues of €15.2 billion and €6.2 billion, respectively.

Hermès’ core products like the Birkin and Kelly bags are in high demand, priced around €10,000 in Paris with even higher prices in the second-hand market. Since its founding in 1837, Hermès has withstood the impact of declining luxury demand through strong pricing power and perennial product waiting lists.

LVMH’s valuation is affected by the “conglomerate discount,” with brands like Sephora underperforming compared to its core business Louis Vuitton (LV).

The “conglomerate discount” refers to the phenomenon where the total market value of a conglomerate with diversified businesses is lower than the sum of the individual valuations of its subsidiaries. Large luxury conglomerates like LVMH, which owns brands such as Dior, LV, Tiffany, and Sephora, may have some brands with strong profitability like LV, but others with lower profit margins like beauty products and retail channels. Market concerns arise about these brands dragging down overall performance, leading to a discounted overall valuation.

Currently, LVMH is still led by Arnault, who ranks fifth on the global billionaires list. The family of Axel Dumas, the sixth-generation heir of Hermès, has become the richest family in Europe with a net worth of around $171 billion.

In February this year, Hermès’ market value briefly exceeded €300 billion, but concerns over the trade war dragged down the overall luxury goods sector, causing a stock price correction.