LVMH Moët Hennessy Louis Vuitton, the world’s largest luxury group, has seen its market capitalization shrink to less than half of its 2023 peak, reverting to pre-pandemic levels. With luxury consumption that exploded during the COVID-19 era now cooling sharply amid middle-class defection and China’s economic slump, analysts say the growth story of LVMH—once the first European company to surpass a $500 billion market cap—has effectively come to an end.

According to the Financial Times, LVMH’s market capitalization stands at €213 billion (approximately $247.4 billion), down more than half from its 2023 peak. That is comparable to levels seen in January 2020, just before the pandemic began. LVMH, which owns global luxury brands including Louis Vuitton and Dior, crossed the $500 billion market cap threshold in 2023—the first European company to do so—as luxury spending surged during the pandemic.

China was the engine of LVMH’s growth at the time. As luxury consumption soared in the world’s second-largest economy, LVMH posted first-quarter revenue growth of 17% in 2023, nearly double market expectations. China’s share of LVMH’s total revenue was estimated to have reached as high as 30% at one point, underscoring the group’s heavy reliance on the market.

However, the economic downturn that began in China roughly three years ago has eroded luxury spending and shaken LVMH’s growth engine. Middle-class consumers, whose purchasing power was weakened by inflation, began cutting back on luxury purchases. Geopolitical risks—including U.S. trade disputes and the Middle East conflict—further compounded the deterioration across the luxury sector.

Global consultancy Bain & Company estimates that approximately 60 million middle-class customers—so-called “aspirational consumers”—have stopped buying luxury goods over the past three years. That represents roughly 15% of the total luxury consumer base. Successive price hikes by luxury brands are also cited as a factor driving middle-class defection. According to Bain, prices for many luxury products have risen 50–70% compared to 2019.

Flavio Cereda, fund manager at asset manager GAM, said: “LVMH has plenty of top-tier clients with ample spending capacity, but they don’t account for the bulk of LVMH’s business. As middle-class spending power has weakened, recovery signals have repeatedly proven to be ‘false rebounds.'”

Clear Divergence by Brand…Jewelry Holds Up

The luxury sector as a whole is not uniformly depressed. There is a clear divergence in performance and stock price trends across brands.

Ultra-high-end brands and luxury jewelry houses with a higher proportion of wealthy clients continue to post relatively solid results. French luxury house Hermès and Italian luxury brand Brunello Cucinelli have maintained healthy momentum through the downturn. By contrast, French luxury group Kering—parent of Italian brand Gucci—and British luxury brand Burberry have recorded lackluster performance.

Swiss group Richemont, which owns global luxury watch and jewelry brands including Cartier, Van Cleef & Arpels, and Piaget, has seen its shares climb 28% over the past six months, pushing its market capitalization above €100 billion (approximately $116.2 billion). Within LVMH itself, demand for jewelry brands Tiffany & Co. and Bulgari has remained steady.

Federico Marchetti, a luxury industry executive, noted that as handbag prices have risen sharply, consumers are shifting spending toward jewelry such as bracelets and necklaces. “At current price levels, consumers appear to prefer buying €10,000 jewelry over a €7,000 handbag,” he said.

Earnings Remain Above Pre-Pandemic Levels

Despite the sharp stock decline, LVMH’s earnings remain above pre-pandemic levels. The group’s continuing operating profit last year was €17.8 billion (approximately $20.7 billion), up more than 50% from 2019.

Signs of a luxury spending revival have recently emerged in the U.S. and South Korea, buoyed by rising equity markets. This has led some analysts to argue that the current luxury market downturn is a temporary, cyclical phenomenon driven by deteriorating economic conditions and consumer sentiment—rather than a structural shift. That said, given that middle-class defection amounts to 60 million consumers, many expect a rapid return to pandemic-era growth rates will be difficult to achieve in the near term.