Europe's Luxury Houses Are Now Cheaper to Own Than They've Been in a Decade

Europe's biggest luxury stocks are trading at their cheapest valuations in more than a decade, according to Bloomberg, after results from Hermes and LVMH crushed hopes that the industry's slump was close to over. For a sector built on scarcity and markup, "everything's on sale" is not the message anyone over there wants to send.

Hermes reported Q3 revenue up 5.5% to about 4.1 billion euros, a number that came in slightly below analyst forecasts despite leather goods and saddlery growing 12.4% and the Americas climbing 10.7%. The soft spot was Greater China, where sales declined on a weak property market, shaky consumer confidence, and new tax rules hitting Chinese shoppers. That followed LVMH's own report the week before, showing a 5% organic decline in its Fashion and Leather Goods division. Bernstein analysts summed up the mood bluntly: even Hermes, the industry's most resilient name, still faces "a generally difficult trading environment."

When the house that sells a five-figure Birkin with a waitlist attached starts missing estimates, the problem is not really about any one handbag. It is a sector-wide reminder that even scarcity has a ceiling, and right now the whole category is finding out where it is.

Source: Bloomberg

Kyle Duford, Founder & Editor, BRNDWIRE. More from Kyle →