The mood on the Paris stock exchange is subdued: while the has reached new highs following the easing of the trade dispute between the US and China, the remains well below its record high. The main reason is the luxury goods industry, which, with a total weight of just under 30 percent in the index, is suffering more than other sectors from the threat of US tariffs.
Companies such as LVMH (EPA:), Kering (LON:), Hermès, and L’Oréal (EPA:) produce most of their luxury goods in Europe and would have to expect losses if their prices in the US were to rise by 20 percent.
LVMH is Particularly Hard Hit
Almost every fourth euro of sales comes from the US, where the group operates handbag factories as well as wineries and distilleries. If LVMH does not pass on the additional costs to customers, profitability is likely to decline significantly – in the first quarter, price- and portfolio-adjusted sales in the fashion and leather goods segment already fell by three per cent.
Bernard Arnault sees March as the turning point, after the prospect of higher tariffs and geopolitical tensions clouded the business outlook. The spirits division, Moët Hennessy, is also feeling the effects of weak demand in China and high import tariffs on cognac there. Within two years, the company’s market value has almost halved from 450 billion to 250 billion euros.
Will LVMH Shares Continue to Slide?
While it is true that the tariff dispute has not been good for the share price, Arnault’s assessment that March marked a turning point is incorrect. Since reaching an all-time high in April 2023, the share price has undergone a very sharp correction, but the end is already in sight. We expect the previous low of €471.25 to be broken. The ideal turnaround zone is between €434.30 and €401.25. We plan to buy.
Hermès Impresses With Niche Model
The extremely high-priced Birkin and Kelly bags appeal to a solvent clientele who are less concerned about price increases and economic downturns. A 7.2 per cent increase in sales in the first quarter recently made Hermès the most valuable company on the Paris Stock Exchange. However, we currently consider the share to be too risky. It has risen very sharply and is now in free fall, which could continue for some time.
L’Oréal Could be the Secret Winner
L’Oréal shares have also undergone a very sharp correction. However, we believe that this has already come to an end at €323.70. We waited for confirmation and bought the shares on 15 April 2025, passing on our recommendation to our clients.
The share has followed our forecast exactly, rising sharply, and is probably in the process of completing another correction. However, should it fall below €365.90, we expect the downward movement to continue to the purple circle at €359.15 to €349.45. At this point, at the latest, we expect a sustained upward trend reversal.
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Disclaimer/Risk warning: The information provided here is for informational purposes only and does not constitute a recommendation to buy or sell. It should not be understood as an explicit or implicit assurance of a particular price development of the financial instruments mentioned or as a call to action. The purchase of securities involves risks that may lead to the total loss of the capital invested. The information provided does not replace expert investment advice tailored to individual needs. No liability or guarantee is assumed, either explicitly or implicitly, for the timeliness, accuracy, appropriateness or completeness of the information provided, nor for any financial losses. These are expressly not financial analyses, but journalistic texts. Readers who make investment decisions or carry out transactions based on the information provided here do so entirely at their own risk. The authors may hold securities of the companies/securities/shares discussed at the time of publication and therefore a conflict of interest may exist.
