
Who would have thought it…luxury brands are struggling amidst one of the biggest economic crises in American history.
Hardly surprising, is it?
At a glance:
- Bernard Arnault and François Pinault, owners of LVMH and Kering, saw their fortunes drop by billions as luxury stocks fell.
- The decline was triggered by China’s failure to provide details on promised economic stimulus measures.
- LVMH, Kering, Hermès, and other luxury brands suffered significant stock declines, reflecting weakened demand in China.
The titans of the luxury fashion world felt the sting of the market on Tuesday, as a massive selloff in luxury stocks wiped out a combined $14 billion from the fortunes of Bernard Arnault, the CEO of LVMH, and François Pinault, the founder of Kering. These losses come amidst a broader slide in luxury stocks, driven by a lack of clarity from China’s economic planners regarding their stimulus efforts.
Arnault, whose LVMH empire includes household names like Dior and Sephora, saw his company’s stock drop as much as 7% before stabilizing at a 3% loss. This shaved off about $13 billion from his stake in the luxury conglomerate. Arnault, once the world’s richest person, has seen his wealth dip as a result of declining demand for luxury goods in China, where LVMH stock has fallen by 11% this year alone.
https://x.com/Stock_Market_Pr/status/1843780218072522758
Pinault, who controls luxury giants like Gucci and Balenciaga through Kering, also felt the blow as Kering shares fell 8% at their lowest point on Tuesday. Pinault’s 41% stake in the company took a $1 billion hit as the market reacted negatively to China’s lackluster economic outlook. This comes on top of the more than $11 billion Pinault has lost this year.
Other major luxury players were not spared either. Hermès, a family-controlled brand with a $150 billion fortune tied to its stock, dropped by 3%, trimming the wealth of the Dumas family. Johann Rupert, the former CEO of Richemont, which owns Cartier and Piaget, saw his family’s wealth reduced as well, with Richemont shares also slipping 3%.
The root of the selloff appears to be the disappointment stemming from China, where investors were eagerly awaiting specific details on how the government would stimulate its economy. Although economic planners hinted at interest-rate cuts and liquidity support, the lack of concrete measures sent shockwaves through global markets, with luxury stocks bearing the brunt of the fallout.
While Chanel is privately owned, its co-owners, Alain and Gérard Wertheimer, likely experienced a dip in their fortunes as well, given the widespread slump in the luxury sector.
The luxury market, particularly reliant on demand from China, remains highly sensitive to economic signals from the region. As of now, investors are left waiting for the concrete stimulus measures that could potentially stabilize luxury stocks. Until then, it seems even the most glamorous brands can’t escape the whims of the market.