Loser of 2024: The Luxury Market

Luxury brands were riding the subway instead of lounging in limos this year. 

Early in 2024, it became obvious that frugal consumer sentiment in China was going to be a big problem, and big luxury conglomerates including LVMH and Kering suffered eroding share prices as the year wore on. There were a couple of luxury names able to buck the trend. Their secret? Cultivate as much exclusivity as possible. 

So Not Hot Right Now

Together, LVMH and Kering own just about every brand that gets name-dropped in The Devil Wears Prada — except for Prada itself. LVMH owns Dior, Bulgari, and Tiffany & Co., plus premier champagne house Moët & Chandon, which produces Dom Perignon. Kering’s stable holds Gucci, Yves Saint Laurent, and Balenciaga. In October, LVMH reported the first sales drop at its core fashion and leather goods business since 2020, sending it into a somewhat gloomy holiday period. LVMH’s share price reached a peak in March this year, but has tumbled around 30% since. Kering’s stock also peaked in the first quarter, but fell a staggering 49% afterward. 

While luxury stocks may be going through hard times overall, some brands managed to swim against the current:

• Hermès consistently outperformed its luxury brethren — although its success is somewhat qualified since it, too, saw its share price peak in March. One secret to its success is that it makes consumers put themselves on waiting lists for its famous Birkin bags, meaning even when consumers feel the pinch, there’s a pipeline of people waiting to buy.
• It’s not just the fashion business where “treat ‘em mean, keep ‘em keen” paid off this year. Ferrari managed to speed past rivals because it only sells about 14,000 cars a year, so even when big markets like China contract, there’s plenty of demand for its high-margin business.

Diamonds Are For… Oh, Wait: You can’t get much more luxurious than diamonds, but despite their tough nature, the natural diamond industry took a few knocks this year. Mining company Anglo American has spent the year trying to offload diamond giant De Beers, and even cut diamond production in July in response to weaker demand from China.