The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
PARIS, France — US President Donald Trump's proposed additional tariffs on $2.4 billion of French goods, ranging from handbags to sparkling wine and makeup, could be an overhang for months on shares of LVMH, Hermès International and Kering SA.
French luxury stocks fell 2 percent or more at midday in Paris, after the US announced the levies. The stocks touched session lows in late morning as Trump, speaking in London, indicated that a trade deal with China may not happen for another year.
US sales of the products targeted by Trump account for a relatively small portion of the companies’ earnings, traders and analysts said. And investors have learned that a threat of tariffs doesn’t necessarily mean they will ever be put in place. Still, for an industry already hurt by the US-China trade dispute and Hong Kong protests, the news is unwelcome.
“Potential new tariffs aren’t good for sentiment on French consumer names but there’s Trump tariff threat fatigue,” Keith Temperton, a trader at Tavira Securities, said by email. Still, the “overhang of tariffs remains” on these stocks, he said.
ADVERTISEMENT
Some companies also are already taking action to stay on Trump's good side: LVMH recently opened a new Louis Vuitton factory in Texas, part of Chairman Bernard Arnault's efforts to hedge against trade tensions and build on the rapport he's established with the US president. LVMH last month agreed to buy Tiffany & Co. for $16.2 billion to expand its US footprint.
France's benchmark CAC 40 Index slipped 0.5 percent at 12.05 pm. in Paris, dragged down by Hermès, LVMH and Kering, which owns the Gucci and Saint Laurent brands. The three stocks plus cosmetics company L'Oreal SA account for about 18 percent of the index's weighting.
Here is what analysts are saying about the proposed tariffs:
Bernstein, Luca Solca
Jefferies, Edward Mundy
Liberum, Nico von Stackelberg
Bloomberg Intelligence, Duncan Fox
By Albertina Torsoli; editors: Beth Mellor, Phil Serafino and Jon Menon
The deal is expected to help tip the company into profit for the first time and has got some speculating whether Beckham may one day eclipse her husband in money-making potential.
The designer has always been an arch perfectionist, a quality that has been central to his success but which clashes with the demands on creative directors today, writes Imran Amed.
This week, Prada and Miu Miu reported strong sales as LVMH slowed and Kering retreated sharply. In fashion’s so-called “quiet luxury” moment, consumers may care less about whether products have logos and more about what those logos stand for.
The luxury goods maker is seeking pricing harmonisation across the globe, and adjusts prices in different markets to ensure that the company is”fair to all [its] clients everywhere,” CEO Leena Nair said.