Luxury brand stocks plunge to lowest level in years as LVMH, Kering and Herms hit with sales declines

Stocks for some of Europe’s most famous luxury brands are plummeting to their lowest level in years as Chinese customers cut back purchases and an industry revamp fails to launch.Shares are down a jaw-dropping 40% so far this year for the continent’s fashion stalwarts — LVMH, parent company of Louis Vuitton, Gucci and more; Kering, which owns brands including Gucci and Bottega Veneta; and independent-minded Hermès.A widely reported drop in demand for luxury products — particularly among Chinese customers and international social climbers, sometimes called “aspirational shoppers” in industry lingo — is to blame for Kering’s woes, the Wall Street Journal noted.“We know we have a lot of work to do in China,” the conglomerate’s finance chief Armelle Poulou said on an earnings call.Kering sales dropped 1% in the third quarter.LVMH and Hermès each saw a 2% decrease.

At Gucci alone, sales were down 6%.The drop comes as the Chinese economy has been taken a beating.While unemployment is up, property values and household spending have been trending downward, according to the Journal.

The country recently saw its slowest GDP growth since 2022.“Despite the recent share ​price weakness, we expect some further pressure on the space as a whole today, with confirmation that the Chinese cluster seems ​to have taken a material (and bigger than feared) step down,” said JP Morgan analysts said in a note to investors about LVMH, according to Reuters. The stock decline has put a dent in LVMH kingpin Bernard Arnault’s fortune.He last topped Forbes’ list of billionaires in 2024, when he was worth $233 billion, but his wealth is listed at around $171 billion today, putting him in seventh place.

Meanwhile, LVMH-owned Zenith has started a consultation process that may lead to layoffs, according to Reuters.Customers in Asia, with China as the lead, account for a quarter of Kering’s sales. An Hermès finance exec said the Chinese market – the company...