Hermès overtakes Bernard Arnault's LVMH to become France's most valuable company
Reuters
- Hermès surpassed LVMH's valuation on Tuesday after Bernard Arnault's company reported disappointing sales.
- The 3% decline in first-quarter sales compared with a 2% rise forecast by analysts.
- LVMH stock has fallen 38% in the past 12 months, while Hermès is up 2%.
Hermès surpassed arch rival LVMH on Tuesday to become France's most valuable company after Bernard Arnault's conglomerate posted sliding first-quarter sales.
The Birkin bag maker was worth almost 248 billion euros ($281 billion) in lunchtime trading in Paris after LVMH fell as much as 8%, leaving it valued at about 245 billion euros.
The Givenchy and Fendi owner said on Monday that first-quarter sales fell 3%, compared with the 2% rise forecast by analysts.
LVMH has had a torrid few months due to a wider downturn in the luxury sector after Chinese consumers started cutting their spending. That was before the economic uncertainty sparked by President Donald Trump's tariffs complicated the picture even further.
The stock is down 38% over the past 12 months, while Hermès is up 2%.
Arnault is still one of the world's wealthiest people worth $165 billion, according to the Bloomberg Billionaire Index. His net worth has fallen by $13 billion this year.
Carlos Barria/Reuters
Analysts at UBS said in a Tuesday note that the "end of earnings downgrades is not in sight yet" for LVMH and cut their earnings per share estimate by a further 11%.
Adam Cochrane at Deutsche Bank wrote that disappointing sales results at LVMH's fashion and leather goods division were on par with earnings from the third quarter last year.
"Despite consensus forecasts falling into the print this is below the low end of any investor conversations we have had," he said.
Bank of America analysts cut their LVMH earnings per share forecast by 6% to 8% and warned: "The luxury sector will continue to face many share price ups & downs until organic revenue growth accelerates back to mid-single digit."
It's a stunning turnaround for LVMH. In October 2010 it revealed a 17% stake in Hermès and Arnault tried to persuade the family that controlled the company to sell — without success.
LVMH did not immediately respond to a request for comment.