There has been a shift on the list of the most valuable companies in luxury fashion. The maker of Birkin bags, Hermes, has overtaken LVMH as the world’s most valuable luxury firm after a weaker-than-expected sales report from the owner of Louis Vuitton caused a drop in its shares.
The French luxury goods manufacturer LVMH (which, in addition to Louis Vuitton, also owns the Dior fashion brand) had three percent lower revenue in the first quarter of this year compared to the first quarter of last year, which it attributes to hostile United States (U.S.)trade policies.
Analysts had expected a revenue increase of two percent. LVMH shares fell eight percent on Tuesday, as its competitor Hermes took first place among luxury goods producers by market capitalization.
This year, LVMH shares have fallen 23 percent and are among the worst performers on the Paris CAC40 index.
The first-quarter update led to a 7.8 percent drop in shares of the French luxury giant on Tuesday, wiping out about 23 billion dollars from its market value.
It ended the day with a market capitalization of 244.39 billion euros or 277.42 billion dollars, according to FactSet data. Meanwhile, Hermes shares in Paris closed 0.2% higher, giving the company a market value of 248.62 billion euros.
The industry leader, LVMH, reported a drop in sales in the first quarter, hit by weaker demand from Chinese buyers compared to last year and a decline in the U.S. market in retail of Sephora cosmetic products and in the wine and spirits division.
