Thanks to growing sales of luxury products in China and a stronger euro, LVMH's market worth reached $500 billion (€454bn). Making it the first European business to do so

Thanks to growing sales of luxury products in China and a stronger euro, LVMH's market worth reached $500 billion, making it the first European business to reach that milestone.

The accomplishment comes in a matter of weeks after LVMH, boosted by a spike in first-quarter sales, entered the top ten corporations in the world. Later, rival Hermes International released similarly impressive figures, supporting the idea that China's reopening following pandemic lockdowns is boosting development throughout the industry.

The company's increasing worth has increased the wealth of Bernard Arnault, the richest man in the world, who turned LVMH into a major worldwide player through a series of acquisitions. According to the Bloomberg Billionaires Index, he is worth close to $212 billion.

Earlier in the day, LVMH's shares increased 0.3% to €903.70, valuing the firm at €454 billion ($500 billion).

LVMH and its French luxury competitors are to the European markets what Big Tech has become in the US: Powerful companies whose development endures despite fluctuations in the state of the economy. This is demonstrated by the fact that a large number of technology businesses dominate the worldwide market value rankings, while LVMH is the newest arrival and takes 10th position.

Even though the globe was on the verge of entering a recession due to skyrocketing inflation and rising interest rates, demand for LVMH items, like Louis Vuitton purses, Moet & Chandon Champagne, and Christian Dior dresses, has remained strong.   

This month, LVMH issued a warning that the US economy is slowing, with demand for cognac and leather products being particularly affected. Some investors are concerned that the company would eventually suffer should the recession become more severe.

Ironically, current recession fears are increasing LVMH's monetary worth. This month, when the dollar fell, the euro rose to its highest level in more than a year, driven by rising market predictions that the US economy's deterioration will force the Federal Reserve to lower interest rates this year.

Ashley Wallace of Bank of America Corp. predicts that the stock will reach €1,000 in the next year. "LVMH is too cheap given the attractiveness of the luxury goods sector, its strong portfolio of brands, and its best-in-class execution," Wallace said in a report on April 13.

In order to maintain the firm under family control for many years to come, Arnault, 74, and his family now possess 48% of LVMH's share capital.

There is no indication that Arnault plans to retire any time soon. The age restriction for LVMH's CEO was raised last year, allowing him to serve in that capacity until the age of 80.

(bloomberg.com, goldmansachs.com, bankofamerica.com)