Europe’s biggest luxury firms are trading at their lowest valuations in over a decade, as Hermès International SCA and LVMH Moët Hennessy Louis Vuitton SE report sluggish sales, particularly in China. Hermès shares dropped 4.9% after third-quarter sales missed expectations, with its forward P/E ratio falling from 70 to 27 times earnings. LVMH now trades at 16 times forward earnings, its cheapest level since 2013.
Both stocks have declined roughly 40% in 2024 as a hoped-for Chinese recovery failed to materialize. Wealthy consumers pulled back due to a property crisis, weak markets, and offshore wealth taxes. Kering SA, owner of Gucci, also reported weak China sales. Bernstein analyst Maria Meita noted valuations reflect both weak results and a fragile macro environment.
Social unrest in France adds further risk, threatening store traffic and tourism, per Bloomberg Intelligence’s Deborah Aitken.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing