For France's richest billionaires, including LVMH President and CEO Bernard Arnault, 2024 may be a year they will never forget. As demand for luxury goods in the global market, particularly the largest market, continues to cool drastically and European politics is unstable, the overall value of billionaires in the French luxury industry has experienced the largest annual evaporation in history, that is, the decline in their total wealth has set a record. The leaders at the helm of the three luxury giants LVMH, L'Oréal, and Kering Group lost a total of about 70 billion dollars.

According to the Bloomberg Billionaires Index, the richest people in France, such as Bernard Arnault, L'Oréal heir François Bettange Meyers, and François Pinault, the helm of Kering Group, are also among the richest people in the world, yet their overall wealth has evaporated in record amounts of about 70 billion dollars since this year. The luxury goods industry giants they control separately — LVMH, L'Oréal, and Kering Group — are all among the biggest losers in the French stock market this year. In particular, Kering Group — the parent company of Gucci (Gucci) has shrunk its market value by about 41%.

The sell-off of shares in the luxury goods and high-end personal care industry by global capital has drastically shrunk the wealth of the three richest French people. Consumers from Asian markets such as China are spending almost at an all-time low on luxury goods such as high-end leather goods, designer dresses, and high-end luxury skincare products, while companies including Gucci, a subsidiary of Kering Group, are struggling to cope with new management and strategic changes. France's turbulent political situation — including the complete dissolution of the government led by Michel Barnier this month, has also drastically weakened global investors' interest in French stock assets, and triggered global capital to sell French stocks.

“Consumers in Asian regions such as China were supposed to be growth engines in 2024, but this did not happen.” Fund manager Ariana Hayat from Edmond de Rothschild Asset Management said, “Furthermore, as retaliatory spending gradually subsided after the COVID-19 pandemic, the luxury goods market inevitably showed a weak trend after three years of unconventional growth.”

After experiencing a consumer boom, the luxury industry finally “returned to reality”

In the three years since the global lockdown caused by the COVID-19 pandemic was lifted, sales in luxury goods such as leather goods, dresses, and high-end luxury cosmetics industries soared because during the lockdown restrictions, consumers accumulated huge cash reserves due to the sharp rise in the stock market brought about by the “opening of the world's central banks” and large amounts of government subsidies, and began to buy high-end luxury brands on a large scale.

An unprecedented trend in consumer spending during the post-pandemic global retaliatory spending boom helped push LVMH founder Arnault to once top the Bloomberg Billionaire Wealth Rankings, and was once significantly ahead of Tesla CEO Musk. He has now dropped to 5th place. So far this year, he has personally lost more wealth than any of the richest people in the world's 500 richest people, losing about 31 billion dollars. Currently, his worth cannot be compared to Musk, the richest man in the world. As for L'Oréal's heir, Betancourt Meyers, she has long been the richest woman in the world, becoming the first woman to have a fortune of 100 billion dollars last year. She has now lost these two crowns.

“For the entire luxury industry, it's really back to reality.” Kevin Tozet, a member of the Paris Carmignac Investment Committee, said. “Everything that has happened since 2023 is a sign of a trend towards normalization.”

Pino, 88, founded the predecessor of the Kering Group, and his wealth was also severely damaged on a large scale. The market value of Gucci's parent company Kering Group fell by about 64% from an all-time high in August 2021 to only 22 billion dollars now. This was the largest percentage drop among all on the Bloomberg Billionaire Wealth Index during the same period, mainly due to the unprecedented demand dilemma faced by Gucci, its largest fashion luxury brand.

At a time when Pino's wealth was shrinking, his son François-Henri Pinault, 62, was in charge of the Kering Group. He strives to shift this large luxury business empire from a hodgepodge of retail assets to focus on high-end luxury goods. However, during his tenure, Kering still largely relied on Gucci's huge sales contributions, and the scale of Gucci's performance fluctuated. The Pino family holds 42% of the Paris-based Kering Group's shares and 59% of the voting rights. After a series of profit warnings, Kering Group's stock price has continued to plummet since this year.

Once upon a time, European luxury giants were compared to the “Big Seven US stocks”

Since 2024, the stock prices of European luxury giants, including LVMH, L'Oréal, Kering Group, and Lifeng Group, have collectively plummeted. However, just two years ago, they were also regarded by European asset management giants as major performance growth giants in mainland Europe, believing that their scale of performance growth and attractiveness to global capital is comparable to Wall Street's “Seven Major US Tech Giants”.

The “seven major tech giants in US stocks” are the so-called “Magnificent Seven.” They include Apple, Microsoft, Google, Tesla, Nvidia, Amazon, and Meta Platforms. They are the core driving force behind the S&P 500 Index's many new highs. Looking at US stocks as a whole, the “Big Seven Tech Giants” have been the core force leading the rise in US stocks since 2023. With their unparalleled AI revenue generation scale, rock-solid fundamentals, strong free cash flow reserves over the years, and the ever-expanding scale of stock repurchases, they have attracted a flood of capital from around the world.

Notably, this unprecedented “winter of demand” has not had a negative impact on all luxury brands on the same scale. The world's top luxury brand, Hermès Kelly, sold for at least $0.01 million in overall sales in the third quarter, thanks to its product positioning for the world's richest customers, who often spend more flexibly than less affluent customers. This is why sales of Gucci, which favors the middle and high-end, are weak, while Hermès sales, which favors the richest group, unexpectedly increased.

In the 2024 luxury goods rise and fall list published by Saxo Bank of France, there is already the biggest winner — Hermès, whose stock price has risen about 18% in the European stock market since the beginning of the year, and Kering Group shares at the bottom of the ranking. André Tourney, head of sales transactions at Saxo Bank of France, said that Hermès' high profit margins are due to the long-term excellence and rarity of its products, while demand for Gucci products has declined, and recent management changes have not yielded positive results.

Can the luxury goods industry reverse its decline in 2025?

However, as the end of the year approaches, some investment institutions are beginning to show optimism about the entire luxury goods industry, where stock prices have been sluggish since this year, and they are preparing for a possible recovery in demand. A team of analysts from HSBC said that sales in China have not deteriorated further, and sales in the US are recovering. They believe that the third quarter of this year was the industry's lowest point recently.

“Frankly, we're concerned about missing out on investment opportunities.” A team of HSBC analysts, including Erwin Langborg, said in a recent briefing to investors. “We believe the sales situation in the Chinese market has not gotten worse, and sales have been improving significantly since the US election due to the sharp increase in wealth brought about by the stock market. These are two very important factors.”

European asset management giant Amundi SA has just announced the launch of a new exchange-traded fund (ETF) that exclusively invests in luxury stocks in the European market. Amundi SA said that the issuance of such ETFs is mainly due to long-term growth prospects in terms of stock price and performance fundamentals after luxury stocks continued to plummet in 2024, including the expansion of the wealth of the middle class in emerging markets such as Asia, the renewed appeal of consumers to some popular brands, and increased demand for high-end products.

Since the beginning of December, some European asset managers believe that the worst period for the industry may have passed, which in turn stimulated bullish sentiment among investors, and the prices of some large luxury goods and high-end skincare and beauty stocks have rebounded sharply. The Stoxx European Consumer Goods and Services Index rose about 5% this month, the best performance since February this year.

“US tech giants have performed extremely well this year, far surpassing European luxury stocks, but luxury stocks may make a comeback in 2025.” Fund manager Hayat from Edmond de Rothschild said. “I can anticipate a significant rebound in the industry's stock price and performance fundamentals starting in the second half of 2025.”