When Giants Slip and Sleepers Shine
Tariffs hit luxury hard as LVMH and Dior stumble, while resale platforms like RealReal and resilient brands like Rolls-Royce shine.
This week, the luxury sector felt the sting of escalating trade tensions, with major players like LVMH and Dior experiencing significant stock declines.
LVMH's shares dropped over 9%, nearing their 52-week lows, as the company reported a 5% revenue decrease in its fashion division, the third consecutive quarterly decline. Dior faced similar challenges, compounded by recent scrutiny over labor practices in its supply chain.
Abelson Editors
The downturn is largely attributed to the recent imposition of sweeping tariffs by the U.S. These measures have disrupted supply chains, increased costs, and dampened consumer confidence, particularly affecting European luxury brands heavily reliant on the U.S. and Chinese markets.
In contrast, the resale market has shown resilience. RealReal, a secondhand luxury platform, saw its stock rise over 3%, indicating a shift in consumer behavior towards more sustainable and cost-effective options amid rising prices and economic uncertainty.
Meanwhile, Rolls-Royce has managed to navigate the turbulent waters effectively. Despite a temporary share price dip earlier in the month due to trade tensions , analysts suggest that the company's limited exposure to the U.S. market and strong order backlogs have cushioned it from significant tariff-related impacts.
As the luxury landscape adjusts to these new challenges, brands may need to reassess their strategies, focusing on transparency, sustainability, and diversification to maintain consumer trust and demand in an increasingly protectionist global market.
