For the first time in history, the French fashion house Hermès has overtaken the long-time industry leader, LVMH, which owns such legendary brands as Louis Vuitton, Dior and Sephora, in terms of market value. Thus, Hermès has become the world’s most valuable luxury company, The Bell reports, citing financial analysts.

The change in the leader in the luxury sector came amid an unexpected drop in LVMH’s shares. The reason was a significant decline in the company’s sales in the first quarter of 2025 — in particular, the leather segment recorded a 5% drop, while analysts had predicted a 1% increase. Against the backdrop of such results, LVMH shares lost about 7% of their value.

LVMH’s financial difficulties, like those of most luxury companies, were a consequence of the downturn that hit the industry after the “pandemic boom.” The middle class, which once drove brand sales, has significantly reduced its spending on luxury goods. The market is being further pressured by the slowdown in China’s economy and the uncertainty surrounding Donald Trump’s aggressive trade policies.

Against this backdrop, Hermès has managed to maintain stability and investment appeal thanks to a unique business model built on the principle of limited production and exclusivity. The brand is famous for its iconic Birkin and Kelly bags, which are produced in limited quantities and sold only to select customers.

Interestingly, according to research by the online platform Baghunter, Birkin bags demonstrate impressive investment performance — their value grows by an average of 14.2% per year, which exceeds the average annual return of the S&P 500 stock index, which is about 10%. This makes Hermès products not only a luxury item, but also an object of profitable investment.

Thus, despite the general decline in the luxury sector, Hermès demonstrates an example of an effective strategy in a highly competitive market. The company maintains exclusivity, maintains high demand and investor trust, which allowed it to take first place among the world's luxury giants.