\n<\/p>\n
Unlock the Editor\u2019s Digest for free<\/p>\n
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/span><\/p>\n The key skill for the eagle-eyed luxury customer is to identify which among the many nascent trends has staying power, and then zero-in on the product that best captures the zeitgeist. Luxury investors attempting the same feat will find their eyes alight on Bernard Arnault\u2019s LVMH.<\/p>\n The industry bellwether\u2019s third-quarter sales provided early evidence of a turnaround in the sector\u2019s fortunes. Revenues at its key fashion and leather goods division, which houses such brands as Louis Vuitton and Dior, are still falling \u2014 by 2 per cent in the third quarter. But the rate of decline has slowed from 9 per cent the quarter before. That suggests we may finally be nearing the trough in overall luxury spending. <\/p>\n A turn in the luxury cycle would be good news for companies across the sector, and helps explain why LVMH\u2019s results not only lifted its own stock price by 14 per cent on Wednesday but also nudged up those of Herm\u00e8s, Burberry and Gucci-owner Kering. However, the behemoth should benefit disproportionately.\u00a0<\/p>\n For one thing, handbags and frocks \u2014 to which the group is overweighted with its massive LV brand \u2014 are set to do better than rocks. Jewellery has outperformed so-called \u201csoft\u201d luxury recently, growing 4 per cent a year between 2022 and 2025 while the latter was flat, according to RBC analysis, so there is room for a catch-up.\u00a0<\/p>\n Better still, fashion and leather goods brands have taken steps to improve their value proposition, which had suffered from a combination of price hikes and unexciting design. \u201cValue for money\u201d may sound like a quaint concept in an industry that persuades customers to part with thousands of dollars in exchange for wisps of exquisitely crafted gauze. But even the super wealthy, as it turns out, don\u2019t like to feel that they are being taken for a ride. <\/p>\n Now, the industry has moderated its price increases. Indeed, LVMH\u2019s improvement this quarter was mainly due to volume, rather than mark-ups. And broader inflation has caught up with LVMH\u2019s price hikes in France and the US, according to Bernstein analysis. Meanwhile, new designers are creating some buzz.\u00a0<\/p>\n Granted, the luxury upswing \u2014 when it comes \u2014 will be less ebullient than the one the industry experienced after the pandemic. It will be a while before brands can inflate their prices and still sell baubles by the truckload. And LVMH isn\u2019t the only maison that is poised to benefit from a soft-luxury revival, or the only one with new design talent to showcase. Demna Gvasalia at Gucci has also had an encouraging start. <\/p>\n But LVMH\u2019s stock has taken a beating in the slump. This summer, it reversed its historical premium to trade at a discount to the S&P Global Luxury Index on a price to forward earnings multiple, and is now only just above the pack. Kering and Burberry, meanwhile, have priced in part of their turnarounds already. And, while the benefits of the group\u2019s heft aren\u2019t immediately visible in a downturn, when throwing cash around fails to translate into sales, having the money to back its vision stands it in good stead for when the cycle turns. <\/p>\n camilla.palladino@ft.com<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. The key skill for the eagle-eyed luxury customer is to identify which among the many nascent trends has staying power, and then zero-in on the product that best captures the zeitgeist. Luxury investors attempting the<\/p>\n","protected":false},"author":1,"featured_media":28252,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49],"tags":[16795,16794,620,232,16796],"class_list":{"0":"post-28251","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-longawaited","9":"tag-luxurys","10":"tag-set","11":"tag-stage","12":"tag-upswing"},"_links":{"self":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/28251","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=28251"}],"version-history":[{"count":0,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/28251\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/media\/28252"}],"wp:attachment":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=28251"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=28251"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=28251"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}