LVMH Just Became Europe’s First $755 Billion Company
Booming sales of luxury goods in China and a stronger euro have pushed the brand to new heights.
LVMH just extended its record-breaking streak in 2023.
At the top of the year, the luxury giant’s share prices rose by 0.4 percent to a record high of USD$860 (approx. AUD$1300). The French conglomerate achieved a USD$434 billion (approx. AUD$656 billion) market cap for the first time in history as a result. On Tuesday, LVMH set a new benchmark with a USD$500 billion (approx. AUD$755 billion) market cap valuation, making it the first European company to accomplish the feat—and a five-fold increase since 2016.
Booming sales of luxury goods in China and the strengthening euro have contributed to the company’s new financial milestone, Bloomberg reports. Shares in LVMH were up 0.3 percent to €903.70 (approx. AUD$1498) on Monday, but analysts predict the price could go higher. Despite a reported slowdown in LVMH’s U.S. growth—specifically with demand for Cognac and leather goods—analysts see room for future gains, with its stocks potentially hitting up to €1,000 (approx. AUD$1658) in the next year.
“LVMH is too cheap given the attractiveness of the luxury goods sector, its strong portfolio of brands and best-in-class execution,” says Bank of America’s Ashley Wallace in a report. That 75-brand portfolio includes the likes of Dior, Fendi, Loewe, Bulgari, and Celine. One Goldman Sachs portfolio strategist is bullish on LVMH because of “robust margins thanks to their pricing power,” says Lilia Peytavin. Essentially, there’s still a lot of profitability to wring out of the luxury sector compared to other industries. “This differentiates luxury from tech, whose margins have been contracting for several quarters already.”
LVMH’s increasing value this year has also pumped a lot more dough into CEO Bernard Arnault’s personal ledger. Earlier this month, the French tycoon became the world’s richest person for a second time with a total net worth of USD$201 billion (approx. AUD$303.6b billion). The dizzying amount reflected a USD$39 billion (approx. AUD59 billion) increase in Arnault’s finances this year alone, and made him one of three people—alongside Elon Musk and Jeff Bezos—to surpass the USD$200 billion mark. At the time, LVMH’s stock price stood at a record high of USD$186.15 (approx. AUD$309) on April 4. One month prior, the company announced it would be buying back USD$1.6 billion (approx. AUD$2.42 billion) of its own shares.
If you’re keeping tabs on the conglomerate, you might also know that a real-life Succession is playing out within its luxury empire. According to The Wall Street Journal, Arnault has been “auditioning” his five kids to run LVMH since they were young.
The billionaire’s son Frederic Arnault is the CEO of Tag Heuer, Alexandre Arnault is an exec at Tiffany & Co., Jean Arnault oversees marketing and product development for Louis Vuitton’s watch department, and his daughter Delphine Arnault now helms Christian Dior. If one of them does end up taking over, they’ll inherit the company their father has turned into one of the world’s largest.
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