Unlike Hermes, companies like LVMH and Kering have been over-pricing esp the key leather goods in the aftermath of Covid. The write-up, while very broad but not very deep, does not really address the key strategic challenges - what drives your forecast of a return to growth in 2026? what are your assumptions regarding pricing, volume, and why? what will change the demand from the Chinese customer (in China and abroad)? etc…
Luxury often is in a downturn for two years. This is currently going on. I have looked at external market data which is available and all sources expect a recovery over different segments. Pricing and volume would get very detailed, as pricing depends on inflation, do you expect future inflation and how much etc. Volume for luxury is always maximized to keep it luxury. In my opinion it is better to align with general market expectations unless you have a reason to deviate from it. I think the Wines & Spirits one could have a more conservative opinion but I am sure Arnault and his team will manage to move to non alcoholic drinks here as well.
Really solid analysis - love the deep dive. Ended up here from PitchStack.
Unlike Hermes, companies like LVMH and Kering have been over-pricing esp the key leather goods in the aftermath of Covid. The write-up, while very broad but not very deep, does not really address the key strategic challenges - what drives your forecast of a return to growth in 2026? what are your assumptions regarding pricing, volume, and why? what will change the demand from the Chinese customer (in China and abroad)? etc…
Luxury often is in a downturn for two years. This is currently going on. I have looked at external market data which is available and all sources expect a recovery over different segments. Pricing and volume would get very detailed, as pricing depends on inflation, do you expect future inflation and how much etc. Volume for luxury is always maximized to keep it luxury. In my opinion it is better to align with general market expectations unless you have a reason to deviate from it. I think the Wines & Spirits one could have a more conservative opinion but I am sure Arnault and his team will manage to move to non alcoholic drinks here as well.
This is a great deep-dive!
Hello,
What's your opinion on buying the holding Christian Dior, instead of lvmh?
The discount makes sense it seems, if Dior would sell its LVMH stake, it has to pay 25% on it. Source in C&F discord..
The free float of the holding is limited, that is why I prefer to buy LVMH. Even with the discount.
Solid analysis ! 👍
Love it