Haute Finance: LVMH, Richemont ,Kering and Hermès - The stock market défilé of the luxury giants

Company portraits

LVMH (Louis Vuitton Moët Hennessy)

With 75 brands, LVMH is the largest luxury goods group in the world. The company was founded in 1987 through the merger of Louis Vuitton and Moët Hennessy and is headquartered in Paris.

Hermès

The traditional French luxury company, founded in Paris in 1837, is known for its exclusive leather goods and accessories. Hermès has been family-owned for six generations.

Kering

Kering, originally founded in 1963 as a timber trading company, transformed itself into a luxury and lifestyle group. The Paris-based group operates several renowned fashion brands.

Richemont

Richemont is a Swiss luxury goods group that specializes primarily in jewelry and watches. Founded in 1988 through the spin-off from the Rembrandt Group, the company is headquartered in Bellevue near Geneva.

Historical development

LVMH has achieved its rise through an aggressive expansion strategy and numerous acquisitions, becoming the undisputed number one in the luxury segment. In 2024, it briefly became the most valuable company in Europe.

Hermès began as a saddler's workshop, but over time expanded its range to include leather goods and fashion. Despite its global success, Hermès has maintained its independence and strict control by the founding family.

Kering underwent a radical transformation: originally a timber trading company, Kering became a global player in the premium segment through strategic acquisitions and a focus on luxury brands. PPR was renamed Kering in 2013.

Richemont increasingly focused on luxury goods in the 1990s and continuously built up a portfolio of renowned brands in the jewelry and watch segment.

Business models and core competencies

LVMH has a diversified portfolio of 75 brands, ranging from fashion and leather goods to watches, jewelry, perfume and wine. The company focuses strongly on exclusivity and premium prices, coupled with a strong presence in Asia.

Hermès focuses on craftsmanship excellence and the highest quality. Production remains deliberately limited to ensure artificial scarcity and exclusivity. Hermès sells its products exclusively through selected distribution channels to secure its coveted position in the high-end segment.

Kering pursues a multi-brand strategy with a focus on fashion and accessories. Gucci, the most important brand in the portfolio, generates around 50% of sales. Through strategic acquisitions, such as the stake in Valentino and the purchase of Creed, Kering is strengthening its position in various luxury segments.

Richemont specializes in jewelry and watches and operates in-house brands such as Cartier, Piaget and IWC. The company pursues a rather conservative growth strategy and focuses on the development of its existing brands.

Future prospects and strategic initiatives

LVMH is planning further expansion in Asia and is investing heavily in digitalization and omnichannel strategies to seamlessly connect the customer experience in physical and digital stores. The company is also placing greater emphasis on sustainability initiatives.

Hermès continues to focus on its exclusive positioning and is cautiously expanding into new markets, particularly in Asia. At the same time, the company is investing in expanding its online presence to improve the digital experience.

Kering faces the challenge of repositioning Gucci and revitalizing the brand. At the same time, Kering is planning to expand through acquisitions, such as the stake in Valentino and the acquisition of the fragrance brand Creed. The beauty segment will also be further expanded.

Richemont is focusing on expanding its jewelry and watch business, particularly by strengthening its renowned brands. The company is pursuing a selective acquisition strategy in order to secure growth.

Market position and competition

These four companies dominate the luxury market. LVMH is the undisputed market leader, followed by Hermès, which stands out due to its extremely exclusive positioning. Kering and Richemont operate in a broader spectrum of the luxury segment, with Kering being particularly strong in fashion and Richemont in jewelry and watches.

Total Addressable Market (TAM)

The global luxury market is growing continuously, driven by increasing purchasing power in emerging markets, particularly in Asia. China is a key factor for all four companies, as the country's growing middle and upper classes are generating strong demand for luxury products.

Share performance

- LVMH: TR 5 years 103%

- Hermès:TR 5 years 265%

- Kering: TR 5 years -39%

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Conclusion

Caution is advised in the fashion sector: Sometimes something is in, sometimes out. In the long term, it would make sense to diversify into more than one brand, but Hermès delivers consistently. However, the brand is too expensive for me; an iconic brand also has an iconic price, and most of the key figures speak for themselves. Hermès stands for luxury within luxury but also delivers.

If you want to cover the industry comprehensively, LVMH is the best choice. An ETF that invests in a share with different brands offers a lot of diversification and is managed by a clever team. Bernard Arnault is one of the best M&A experts in the world, and as long as he remains at the helm, nothing significant will change in this portfolio; it will only get bigger.

Richemont is the exact opposite, and the current figures are rather disappointing, so I'll wait and see. After extreme hype in the watch industry, the company is now in a stagnant area, partly because it doesn't have the top luxury brands.

Kering is interesting, but disappointing. The numbers don't add up, the family doesn't work skillfully enough, and there is too much dependence on Gucci. You could say that Kering is the weaker LVMH, but also cheaper. In view of the price, the question is whether one should not strike, as Eyewear is doing very well and the brands are repositioning themselves. The problem lies more in the management, which has made many mistakes.

For investors looking for value, LVMH is the best choice.

You have to like Hermès, but the figures speak for themselves.

Kering could turn out to be a bargain in the long term, but is a turnaround candidate in the short term.

I can hardly say anything positive about Richemont. The brand is cool, but it's doing poorly, so we'll have to wait and see when the trends change. After all, the company is hugely dependent on jewelry.