In 2024, the leading figures of France’s luxury industry encountered unprecedented challenges. Bernard Arnault (LVMH Moët Hennessy Louis Vuitton), Françoise Bettencourt Meyers (L’Oréal), and François Pinault (Kering) collectively saw their companies lose a staggering $70 billion in value. This decline is largely attributed to weakened demand for luxury goods and political instability.
Kering was hit the hardest, losing 41% of its value on the French stock exchange due to declining sales at its flagship brand, Gucci, and difficulties in strategic management. Bernard Arnault, who had become the world’s wealthiest individual during the pandemic-driven “revenge spending” boom, lost $31 billion in assets and fell to 5th place in the global rankings. Meanwhile, Françoise Bettencourt Meyers, the heiress to L’Oréal, fell from her position as the world’s wealthiest woman, with her net worth dropping below the $100 billion mark.
Stagnation in the Chinese Market and Political Turmoil in France
The decline in demand for luxury goods has been heavily influenced by the slowdown in the Chinese market, previously seen as a “growth engine” for the industry. The pandemic-driven surge in “revenge spending” has subsided, and economic stagnation in China has tightened consumer spending. As a result, many brands have failed to achieve their anticipated sales figures, exposing the industry’s harsh realities.
In France, political instability further exacerbated the situation. The collapse of Michel Barnier’s government, coupled with the rise of far-right forces such as the National Rally and the influence of left-wing parties, has shaken investor confidence. This turbulence has significantly dampened interest in French assets, creating additional headwinds for the luxury sector.
Hopes for Recovery in 2025
Despite the setbacks, signs of recovery are beginning to emerge. Analysts at HSBC Holdings report that the decline in sales in China has stabilized, and sales in the U.S. have recovered following the election. In a recent note to investors, the firm stated, “We have the conviction that sales in China are not becoming worse and that sales in the US after the election have been improving. These are the two clusters that count.”
Additionally, Amundi SA has launched a new ETF focused on luxury stocks, highlighting long-term growth prospects such as the expansion of the middle class in emerging markets and rising demand for high-end products.
In fact, the STOXX® Europe 600 Consumer Products and Services Index rose by approximately 5% in December, marking its best performance since February. This suggests that investors are once again adopting a more optimistic outlook for the luxury sector as a whole.
As the industry transitions from the extraordinary growth of the pandemic era to a phase of “normalization,” 2025 will be a crucial year. The resilience demonstrated by ultra-luxury brands like Hermès sets a benchmark for other brands to follow, making it a pivotal moment for the industry to redefine its path to sustainable growth.