Hermès Briefly Overtakes LVMH as Most Valuable Luxury Company After Weak Earnings Report

French luxury conglomerate LVMH Moët Hennessy Louis Vuitton lost its standing as the world’s most valuable luxury company on Tuesday, after reporting a larger-than-expected drop in first-quarter sales that triggered an 8% decline in its share price.

The sales miss allowed Hermès International, maker of the iconic Birkin and Kelly bags, to briefly surpass LVMH in market capitalization. According to market data, Hermès reached a valuation of €245.4 billion ($277 billion), narrowly overtaking LVMH’s €244.7 billion. LVMH shares were on track for their worst trading day since March 2020.

LVMH, which owns brands such as Louis Vuitton, Christian Dior, Tiffany & Co., and Dom Pérignon, reported a 3% year-over-year decline in sales for the first quarter, missing analysts’ expectations of modest growth. Particularly weak performance in wines and spirits, which fell 9%, and a 5% drop in its fashion and leather goods segment — the group’s most profitable division — drove the disappointing results.

The decline has been attributed to softer consumer demand in key markets such as China and the United States. Sales in Asia (excluding Japan) plummeted by 11%, while US revenues dropped 3%. Only Europe posted growth, with a 2% increase.

“The results indicate a more difficult trading environment for the broader luxury sector,” noted RBC analysts, while Deutsche Bank called the numbers “below the low end of any investor conversations we have had.”

The wider luxury market also felt the impact, with shares of rivals including Kering, Burberry, and Richemont all falling during early Tuesday trading.

Beyond consumer trends, the luxury sector is grappling with growing geopolitical and trade headwinds. The US has introduced a 10% tariff on European goods, with a proposed 20% levy now delayed by 90 days. LVMH executives acknowledged that tariff uncertainty had impacted more price-sensitive product categories such as beauty and Cognac, and that aspirational shoppers tend to pull back spending during economic downturns.

LVMH Chief Financial Officer Cécile Cabanis said the company is evaluating a potential expansion of manufacturing operations in the US to help mitigate tariff risks. Currently, about one-third of US Louis Vuitton products are made domestically, and Tiffany & Co. already produces most of its American supply in the country.

“It’s not something you do overnight,” Cabanis said of relocating production. “There are constraints in recruiting, training, and maintaining quality — but we are looking at it.”

LVMH’s disappointing earnings come amid a broader slowdown for luxury companies following the post-pandemic boom. Since its peak valuation in 2023, LVMH has lost over 45% of its market value and was already overtaken last year by Danish pharmaceutical company Novo Nordisk. German software giant SAP now holds the title of Europe’s most valuable firm.

Looking ahead, analysts say the luxury sector’s near-term outlook remains uncertain.

“Shorter-term visibility is very limited, especially in light of trade tension and tariffs,” wrote Bank of America analysts. “The next positive catalyst for LVMH or the sector may have to come from a broader macroeconomic surprise.”

Hermès and other luxury companies such as Moncler are set to report earnings later this week.

With input from CNBC, Bloomberg, Business Insider, and Market Watch.