LVMH's first-quarter results dampened market expectations. Weakening demand in China and the US and the tariff war between Washington and Beijing caused shares to fall by 8.4%. When the giant's share price fell, its market capitalization dropped below €243.5 billion. Hermès entered the vacuum with significantly lower turnover but stable investor appetite for "safe" luxury stocks. Its value climbed to €243.65 billion, making it the most valuable company on the CAC 40 index in a single trading day. Although the curves crossed again the following morning in favor of LVMH, the message remained. No one is too big to be overtaken by craftsmanship, perfectionism, and disciplined growth.

There has been latent tension between the two houses since 2010, when Bernard Arnault secretly bought up Hermès shares and attempted to gain control of the family business. The Dumas family quickly locked up a majority stake and forced LVMH to sell in court. Since then, Hermès has carefully guarded its independence and sees any comparison with the group as a moral victory for its boutique model over the conglomerate approach.

The art of earning more with less turnover

In 2024, Hermès had a turnover of €15.2 billion and earned €6.2 billion; LVMH had a turnover of €84.7 billion and an operating profit of €19.6 billion.

In absolute terms, the differences are huge, but in terms of margins, Hermès is way ahead. Strong price discipline, limited production, and loyalty to craftsmanship create excess demand—the iconic Birkin and Kelly bags are in short supply even when the market cools down. LVMH, on the other hand, is struggling with the so-called "conglomerate discount." Louis Vuitton generates astronomical profits, but the profitability of chains such as Sephora and hotel activities dilutes the resulting lead. Investors are therefore increasingly speculating whether splitting the empire into smaller divisions would bring a higher valuation.

Resilience in the storm: Hermès as a safe haven for luxury

Analysts attribute Hermès' relative invincibility to several factors. First, the brand has never resorted to artificially controlled scarcity—its products are simply difficult to manufacture, with a single bag maker working up to 15 hours on a single handbag. Second, the portfolio ranges from silk twillys costing a few thousand dollars to furniture gems worth millions, allowing the brand to serve different customer segments without compromising the exclusivity of its core offering. The third pillar is emotional value: owning Hermès means joining a club whose membership card cannot be bought at the last minute. It is this combination of limited capacity, high quality, and storytelling about craftsmanship that keeps share prices high, even when stock market indices are dancing in the wind of macroeconomic uncertainty.

What's next: lessons for Arnault's empire

Hermès' mini-victory does not mean that LVMH is losing its dominance, and its portfolio remains the largest luxury cocktail in the world.

Nevertheless, the episode shows that growth based on adding new brands is hitting physical and financial limits. Arnault's group now has to deal with the pressure to diversify: maintaining the pace of innovation in leather goods without weakening margins in beauty and wine, while remaining a comprehensible story for investors. Hermès, meanwhile, can continue to write a quiet chronicle of the illustrative lesson that in luxury, strength does not lie in the number of boutiques, but in the integrity of the stitch that connects them.