Not even Hermès and Ferrari can escape the luxury sell-off
Luxury companies across the board have seen a mass stock sell-off since April 2, affecting even the strongest brands.
Hermès’ share price fell more than seven per cent in early trades on April 7, and has dropped more than 13 per cent since ‘Liberation Day’.
The Birkin-maker was one of the few success stories of the 2023 luxury downturn due to its remarkable capacity to carve out a modern brand identity, with its stock up 230 per cent over the past five years.
Ferrari’s share price, which has risen by more than 156 per cent in the last five years, fell by nearly seven per cent in early trades.
Both stocks are, for once, following the track of the wider luxury market. Burberry, Kering, and LVMH have dropped 18 per cent, 20 per cent 12 per cent, respectively, since April 2.
“There are heavy losses for the luxury sector,” Kathleen Brooks, research director at XTB, said. “Investors are still seeking out areas of safety, including utilities, real estate, healthcare and consumer staples.”
Prior to Trump’s tariffs, analysts viewed the US as the main growth driver in luxury in 2025. The sector has been deeply affected by a post-pandemic downturn in Europe and China.
“The most impacted stocks will be those with the highest revenue exposure to the US,” Mamta Valechha, consumer discretionary analyst at Quilter Cheviot.
Brunello Cucinelli (down 16 per cent since April 2), Pandora (down 20 per cent) and Ferragamo (down 15 per cent) each sell about a third of their goods in the US.
LVMH and Kering sell around a quarter of their goods in the country and Richemont (down 11 per cent) sells around a fifth.
“Companies with strong pricing power and higher-end positioning, such as Hermes and Richemont, might find it easier to mitigate the impact,” Valechha added.
But it’s possible luxury companies used up their pricing goodwill during the pandemic. The average price of personal luxury goods in Europe has increased by an eye-watering 52 per cent since 2019, and high prices were rebuffed by European and Chinese customers in 2023.
If economic growth across the world falls as a result of the tariffs, consumer capacity to absorb higher prices will further reduce, creating problems further afield than the US.
“[Ultimately], how the US (and global) luxury consumer responds to potentially reduced global economic growth remains unknown,” Valechha said.