A striving luxury industry

14th May 2018

Daniel Pfund, Senior Financial Analyst and Fund Manager

The luxury industry is one of the best stock exchange performers this year. The big names of the sector outperform strongly. Since de beginning of the year, in Swiss Francs, LVMH posts a performance of 22.8%, Hermès 26.3%, Kering 26.7% and Richemont 7%, compared to the market (SToxx 600) 2.5%.

 These impressive results are justified by the published first quarter sales figures. The luxury industry fares well and it is the high end segment which sells best. Historically, the high end has always resisted better to market turbulences; Hermès is the perfect example. During the first quarter sales of Hermès have progressed, with constant exchange rates, by 11%. But the strengthening of the euro impacts sales, posting only a growth of 3% in the common currency. However, it is interesting to underline that the company has declared having a limited production capacity, which probably impacted the sales growth. This limitation is part of the high end luxury companies’ strategy, in order to avoid the “mass market”.