LVMH feels strain of luxury slowdown as succession questions loom

Bernard Arnault, the 76-year-old titan behind LVMH, is facing one of the most serious reckonings of his tenure atop the world’s largest luxury group. Against a backdrop of falling demand in China, geopolitical trade friction in the US, and mounting internal complexity, LVMH has seen over 220 billion euros erased from its market value since its peak last year, reported Bloomberg. The group’s sprawling empire, encompassing 75 brands from Louis Vuitton to Moët Hennessy, is showing signs of strain, with recent stumbles at Dior, Louis Vuitton and its wines and spirits division laying bare vulnerabilities. For investors, the absence of a clearly articulated succession plan is compounding concerns.

While LVMH’s fundamentals remain robust, with 10.5 billion euros in free cash flow and falling debt, Bloomberg said, the conglomerate structure and patchy brand performance have drawn scrutiny. Hermès, once a takeover target of Arnault, has now eclipsed LVMH as France’s most valuable company.

Key labels like Dior, now led by Arnault’s daughter Delphine, and Moët Hennessy, overseen by his son Alexandre, are underperforming. A recent management reshuffle and renewed speculation over spinoffs underscore a group in transition. While Arnault has extended the CEO age cap to 85 and positioned Stéphane Bianchi as a potential successor, the lack of a clearly defined succession plan, coupled with the mounting operational complexity of a diversified luxury portfolio, leaves even seasoned investors with unanswered questions.