Oct 8, 2026 · 1h 19m
Hermès holds its ground as luxury stocks stumble
TIP852: Hermès and LVMH Stock: Time to Buy Luxury? w/ Daniel Mahncke & Shawn O'Malley
The episode tests whether luxury’s downturn is cyclical or structural, and whether Hermès’s resilience justifies a premium that LVMH does not.
- 1China’s slowdown and aspirational-customer flight are exposing the difference between ultra-premium brands and broader luxury portfolios.
- 2LVMH’s fashion and leather-goods weakness is weighing on margins, while its wine and spirits division faces additional pressure.
- 3The hosts favor Hermès’s brand durability and customer base, but LVMH remains below their 12% investment hurdle despite its cheaper valuation.
Don't miss
The hosts’ valuation conclusion separates the two companies: Hermès appears to clear their investment standard, while LVMH does not despite its lower price.
The brief
Luxury was once treated as a defensive industry, but price increases and economic pressure have pushed aspirational buyers out, revealing how uneven demand can be.
China’s property slump, weak confidence, unemployment, and political uncertainty have hit marginal luxury demand hardest, while Hermès has retained more loyalty among wealthier customers.
The contrast is structural: LVMH’s diversified conglomerate depends heavily on fashion and leather goods, while Hermès concentrates scarcity, exclusivity, and brand power in one house.
LVMH also faces declining wine and spirits profits and falling fashion margins, making a recovery dependent on renewed growth and a more uncertain cycle outlook.
After revising intrinsic-value assumptions, the hosts reject LVMH at their 12% hurdle rate but view Hermès as the stronger long-term opportunity, despite limited near-term excitement.
What was said on this episode
28 statements · 14 positive · 11 negative · 1 mixed · 2 neutral
LVMH and Hermès have become more attractive after reaching historically low valuations.
“both stocks have become arguably even more attractive as they have kept dropping and have now reached historical valuation lows”
Listen at 0:35
The personal luxury goods market is shrinking by $5–6 billion annually.
“the market size is about $360 billion. But even that market is shrinking by about $5 to $6 billion per year since the end of 2023.”
Listen at 5:30
LVMH sales have declined for two consecutive years.
“LVMH has experienced declining sales for two years in a row now”
Listen at 5:49
Luxury customers fell from 400 million in 2022 to 330–340 million in 2025.
“the luxury industry had about 400 million customers in 2022 and now it's about 330 to 340 million in 2025”
Listen at 8:27
A Louboutin bag now costs substantially more than it did in 2019.
“a Louboutin bag that costs $1,500 in 2019 costs $2,500 today”
Listen at 10:28
Jewelry is outperforming fashion within luxury markets.
“one differentiating factor, if you want to compare those businesses, seems to be that jewelry is doing a lot better than fashion”
Listen at 12:47
Rolex watches generally retain their value over time.
“Rolexes tend to hold their value across time”
Listen at 14:10
Brunello Cucinelli continued growing despite luxury-market weakness.
“Guccinelli was unfazed by the recent struggles in the luxury market and just kept growing nicely.”
Listen at 16:28
LVMH successfully balanced luxury exclusivity with aspirational-buyer volume growth.
“LVMH has done a tremendous job over the last few decades, finding the right balance between staying luxury and introducing aspirational buyers to the brand to grow volume”
Listen at 24:29
LVMH is likely to recover from its current weakness.
“the likelihood that LVMage won't recover. And I would say quite low, probably.”
Listen at 32:11
Chinese home prices have fallen for four years and lack a clear recovery endpoint.
“home prices have been basically falling for four years now. And there's also not really an end in sight yet.”
Listen at 34:49
Chinese consumers increasingly favor gold jewelry for value retention.
“if you're a consumer and you're more interested in buying something that actually holds value and perhaps even increases in value, you probably went for gold jewelry”
Listen at 38:13
China’s wealthiest consumers continued buying Hermès despite economic weakness.
“the consumers that will still go for international brands, maybe not exclusively, but they certainly did not stop buying from Hermes”
Listen at 42:36
The Middle East represents only 5–10% of luxury-market spending.
“the Middle East is only about 5% to 10% of the luxury marketer's spending in general”
Listen at 45:49
The United States is currently supporting the luxury industry.
“What's actually carrying the industry right now is the US market.”
Listen at 51:02
Fed rate increases are a major current risk to U.S. financial asset prices.
“the biggest macro risk right now might be the Fed raising rates and whatever impact that that has on financial asset prices in the US.”
Listen at 52:14
Heavy drinking has lost cultural status among younger people.
“heavy drinking has lost its cultural status with younger people”
Listen at 55:23
LVMH’s wine-and-spirits business will lose volume and underperform.
“I would still believe that there will be lost volume overall. And that part of the business won't do too well.”
Listen at 58:05
LVMH fashion and leather margins fell seven percentage points in five years.
“seven percentage points of margin gone in five years on the segment that makes up three quarters of the group's profit.”
Listen at 1:01:30
Hermès is unlikely to face major structural problems.
“especially for MS, which is actually why I prefer MS in general, I don't expect any bigger problems.”
Listen at 1:02:57
The personal luxury market peaked in 2023.
“the personal luxury market peaked back in 2023”
Listen at 1:03:40
European luxury stocks historically outperform 9–12% after consumer-confidence bottoms.
“European luxury stocks have outperformed the market by 9% to 12% in the 12 months following a consumer confidence bottom.”
Listen at 1:07:17
Hermès shares could return 12–13% at €1,300 under Daniel’s assumptions.
“at a price of about 1300 euros per share, I think we could expect a 12 to 13% return given these assumptions.”
Listen at 1:09:20
Daniel does not currently consider LVMH investable for himself.
“I think LVMH is more or less out of question for me personally.”
Listen at 1:11:24
Hermès is the better long-term company compared with LVMH.
“MS just proves to be a better company in the long term”
Listen at 1:12:26
Gen Z prefers experiences over luxury apparel spending.
“Gen Z prefers to spend more on experiences than on luxury wear”
Listen at 1:14:19
Luxury sales declines would have been worse without recent price increases.
“the decline in sales could have looked a whole lot worse”
Listen at 1:14:42
LVMH and Hermès brands are highly likely to survive.
“I'm highly confident the brands will survive for us personally”
Listen at 1:18:15
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.
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