Kering Shares Fall 12% as Hermès and LVMH Valuations Hit Multi-Year Lows

Gucci owner Kering shares fell 12% on Friday, Oct. 23, after the group reported further sales declines. It said it would stick with CEO Luca de Meo's turnaround plan and speed up store closures, with a target of 125 by year-end.

Shares in LVMH and Hermès were down 1% to 1.5% in the same session, as crude oil prices hit their highest level since early May.

The valuation numbers are stark. After a 40% slide in its share price since Jan. 1, Hermès trades at its lowest valuation since 2014, and LVMH's is at a 10-year low. Bloomberg data show Hermès at about 27 times forward earnings, down from a post-pandemic peak of roughly 70 times.

Even Hermès is slowing

Hermès reported third-quarter results on Thursday, Oct. 22. It posted its weakest quarterly sales growth since 2020. Its ready-to-wear division fell 2% in the quarter on weak Chinese demand.

Hermès had long been the sector's safe harbor. Its Birkin-driven pricing power was supposed to insulate it from the downturn hitting everyone else.

A multiple of 27 times forward earnings is still not cheap by the standards of most listed companies. It is just far below what investors were paying a couple of years ago.

LVMH's miss and the $350 billion hole

LVMH set the tone earlier this month. On Tuesday, Oct. 13, it posted a third-quarter miss in fashion and leather goods, its core business and the home of Louis Vuitton and Dior. Organic sales in the division fell 5%, against analyst expectations of a 1.8% decline. Group organic growth came in at just 1%, below forecasts, and Asia sales slid 5%.

The division, which makes up nearly half of group revenue, had briefly returned to growth in the second quarter after a long losing streak. It has now slipped back into decline.

The ten largest firms on the STOXX Europe Luxury 10 index have lost roughly $350 billion in combined market capitalization since the start of the year, Reuters calculated. LVMH shares are down more than 40% in 2026. Forbes wealth-tracking data show the slide has knocked billions off the fortune of LVMH chairman and CEO Bernard Arnault.

The four largest groups, LVMH, Hermès, Kering and Richemont, have seen their combined market value nearly halve since around 2024. Richemont, which leans toward watches and jewelry, has bucked the trend.

Not everything is shrinking

LVMH's picture is not uniformly bad. Selective retailing, which includes Sephora, grew 8% as Sephora gained market share. Wines and spirits rose 6% on recovering champagne demand. Dior also drew strong interest for Jonathan Anderson's ready-to-wear designs.

LVMH management has so far avoided price cuts and is sticking with premium positioning. CFO Cécile Cabanis has warned that the broader turnaround will take time, with few easy fixes.

Kering is taking a different tack. De Meo's plan is to make Gucci's prices more enticing to middle-class consumers, and creative director Demna's new collections are in stores. Gucci sales were still down 6% overall as fewer shoppers visited its stores, though wholesale improved.

JPMorgan analyst Chiara Battistini said in a note: "The progress made on improving brand desirability remains in its very early stages."

What's weighing on the sector

Reuters tied the latest pressure to the expansion of war in the Middle East and China's tax crackdown on the wealthy. It also pointed to a household squeeze from higher fuel prices.

Riots in Paris left Louis Vuitton shop windows smashed and set off electric-bike bonfires near Place Vendôme. Reuters described them as a sign of political risk at home, not just abroad.

China has been the central worry for roughly three years. Chinese shoppers were the growth engine of the sector, and their pullback has not reversed. Barron's has warned that the selloff could have further to run if they keep holding back.

Lower prices on the shares have not convinced everyone they are bargains. Investors are divided on whether cheaper multiples are a floor or just a waypoint.

Kering's 125-store closure target for year-end is the next concrete test of whether its turnaround can show up in results rather than just in the share price. LVMH and Kering have yet to say when they expect Chinese demand to return.

No company has announced a change in strategy beyond Kering's accelerated closures.