Hermès’ market value surpasses LVMH, which once tried to acquire it

Hermès‘market capitalization surpassed that of rival LVMH, the conglomerate that once tried to buy the maker of the coveted Birkin bag in a stealth raid that shocked the French corporate world 15 years ago.

Hermès International SCA’s valuation reached €243.65 billion ($276.3 billion) on Tuesday, briefly crossing the €243.44 billion of LVMH Moët Hennessy Louis Vuitton SE and catapulting it into the most valuable company on France’s benchmark CAC 40 index.

The stunning reversal in fortunes comes after LVMH tumbled as much as 8.4% in Paris following disappointing first-quarter results on slowing demand in China and the U.S. amid threats of an escalating trade war.

For Hermès, the move vindicates its strategy to remain independent. In 2010, LVMH’s controlling shareholder and billionaire CEO Bernard Arnault revealed that he had quietly amassed a stake in the famed maker of silk scarves.

Arnault’s move prompted the Hermès family to unite, eventually pressuring the man once dubbed “the wolf in cashmere” for his aggressive takeovers of heritage brands to sell his shares a few years later.

LVMH, whose portfolio includes Christian Dior and Tiffany & Co., reported 2024 sales of €84.7 billion and an operating profit of €19.6 billion. Hermès posted sales of €15.2 billion with an operating profit of €6.2 billion for the same period.

Hermès has weathered the downturn in demand for luxury goods better than rivals by catering to the wealthiest and by cultivating a finely calibrated sense of exclusivity and managed scarcity.

The supply-constrained business model has ensured that demand for its handbags like the Birkin — named after the late British singer-actress Jane Birkin — and the Kelly — inspired by Princess Grace Kelly — outstrips what’s on offer.

These bags can retail for around €10,000 in Paris and command significantly higher prices on the resale market. Founded as a harness maker in 1837, Hermès benefits from strong pricing power and long waiting lists for its products.

In contrast, LVMH’s valuation may be hurting from what analysts say is a conglomerate discount, with assets such as Sephora enjoying lower margins than its cash cow brand, Louis Vuitton.

On Monday, LVMH posted first-quarter results that were much worse than expected at its key fashion and leather goods unit. Hermès will publish its quarterly sales on Thursday.

While Arnault often dominates the world’s richest list — he currently ranks fifth on the Bloomberg Billionaires Index — the Hermès family, whose sixth-generation heir Axel Dumas runs the saddle maker, is Europe’s wealthiest with an estimated fortune of about $171 billion as of December.

In February, Hermès’ valuation briefly crossed the symbolic €300 billion level, but concerns about trade wars and tariffs have since hurt the wider luxury sector.