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Sarah Yamout: The Luxury Giants of the CAC 40…A Recovering Opportunity

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LVMH, Hermès, Kering (Gucci)… The shares of the luxury giants of the CAC 40 are licking their wounds and trying at the time of writing to recover on the Paris Stock Exchange after having suffered from the shock of the bankruptcy of Silicon Valley Bank (SVB) in recent days. 

In this regard, Sarah Yamout, co-founder of Prime Luxury Outfit, the Luxury reselling company,claims that LVMH shares thus returned to its low point of the last few months, while the competitor Kering fell back to its levels of mid-February before currently trying to rebound.

She also points out that beyond the uncertainties surrounding the implications of the bankruptcy of SVB, the luxury giants are particularly benefiting, as growth stocks, from the spectacular plunge in long-term interest rates “positive for fair value of these shares” in recent days in the United States.

Luxury sector equities are showing buoyant momentum, In this period of inflation, the luxury giants benefit from low price elasticity “an increase in the selling price of products does not cause a sharp contraction in customer demand, editor’s note”, notes Roni Michaly, CEO of Financière Galilée, which highlights the soaring sale prices of many items in recent decades. 

For example, a Birkin bag from Hermès, which was worth 3,000 to 5,000 francs in 2000, is currently worth around 7,500-8,000 euros, “and this, with a 2-year waiting period, without Hermès being able to guarantee its color. ”, notes the expert. The pricing power “ability to impose, to make customers accept their selling prices” of the luxury giants is impressive. 

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