Hermès Surpasses LVMH and Here Is Why

In a significant shift within the luxury fashion industry, Hermès has overtaken LVMH to become France's most valuable company by market capitalisation in Q1 2025, reaching approximately £213 billion. This development underscores a broader transformation in consumer preferences and market dynamics, favoring brands that emphasise exclusivity and craftsmanship.​

Hermès reported a 17% year-on-year sales increase in Q1 2025, totaling €3.81 billion (approximately £3.26 billion). This growth was driven by strong performances across all regions, with Japan leading at a 25% increase, followed by the Americas at 12%, and Europe at 14%. In contrast, LVMH experienced a 3% decline in sales during the same period, attributed to reduced spending by U.S. consumers and continued weak sales in China.

Hermès' success can be attributed to its strategic focus on maintaining brand exclusivity, controlling distribution channels, and investing in craftsmanship. The company's iconic products, such as the Birkin and Kelly bags, continue to drive demand, accounting for a significant portion of leather goods sales. Additionally, Hermès has expanded its product offerings in jewelry and home goods, which saw a 24.5% growth, further diversifying its revenue streams.

The broader luxury sector has faced challenges due to economic uncertainties and geopolitical tensions. LVMH's struggles have been exacerbated by a decline in Chinese consumer confidence and the impact of tariffs imposed by the U.S. administration. These factors have led to a 38% decrease in LVMH's share value over the past year, while Hermès shares have risen by 2%. ​

Hermès' ascent reflects a shift in consumer behavior towards brands that offer timeless value and authenticity. As the luxury market becomes increasingly polarised, companies may need to reevaluate their strategies, focusing on quality and exclusivity to meet evolving consumer expectations. Hermès' performance suggests that a commitment to heritage and craftsmanship can yield sustainable growth, even amid industry-wide challenges.​

Hermès' rise to the top of France's luxury market capitalization rankings highlights the brand's resilience and the changing landscape of consumer preferences. As the industry navigates economic headwinds, Hermès' model offers a blueprint for success through strategic focus on exclusivity, quality, and brand integrity.​