Hermès chief rebuffs LVMH comparisons as luxury landscape shifts

Hermès executive chairman Axel Dumas is distancing his company from comparisons with luxury giant LVMH, despite both firms' French heritage and family ties. "We don't sell the same products [as Louis Vuitton], so surpassing their size is not a goal as such," Dumas told Fortune in a recent interview.

This stance comes as Hermès outperforms the luxury sector, recording the highest revenue growth in Q2 2024, according to Bank of America. With a market capitalisation of 228bn euros, analysts project Hermès could overtake LVMH's 331bn euros valuation by 2027, according to Fortune.

Hermès's resilience is attributed to its focus on timeless products, trading at over 45 times its estimated 2024 earnings. This strategy has proven effective even in challenging markets like China. "The attachment to quality of Chinese customers remains and this will be an advantage for Hermès," Dumas explained.

As the sixth-generation family leader, Dumas also addressed succession, stating, "I don't want to be like my predecessors in the family, that is to say, to die in office."

While LVMH remains the largest luxury group, the shift in the landscape has seen some critics dub it the "McDonald's of luxury". This provocative comparison reflects growing concerns about the potential dilution of exclusivity in the high-end goods sector.

The Paris-based group, helmed by Bernard Arnault, has achieved unprecedented scale through aggressive acquisitions and organic growth. With a portfolio spanning over 75 prestigious brands including Louis Vuitton, Dior, and Tiffany & Co., LVMH has democratised access to luxury goods globally.

The McDonald's of luxury

However, this expansion strategy has raised questions about the very nature of luxury. Critics argue that LVMH's ubiquity and focus on growth might compromise the exclusivity and craftsmanship traditionally associated with luxury brands. The "McDonald's" analogy suggests a standardisation of luxury, potentially eroding the sector's aspirational appeal.

Proponents, however, view LVMH's approach as a necessary evolution in a globalised market. The group's economies of scale allow for significant investments in marketing, innovation, and sustainable practices across its brands.