LVMH, the world’s largest luxury group, has lost nearly half its market value since its 2023 peak. As analysts point to structural challenges, investors are revisiting the possibility of brand spinoffs, with Sephora and Moët Hennessy seen as key candidates.
LVMH, long considered a bellwether of the Paris Stock Exchange and European equity markets, is facing a significant downturn. Its shares have dropped by 35% over the past 12 months, now trading at €464 with a market capitalization of €230 billion — a 27% fall in 2025 alone. Analysts now speak of a “holding discount,” reflecting concerns over the complexity of the group’s structure and its vast portfolio of more than 75 brands.
Some of those brands — particularly Sephora and Moët Hennessy — may no longer align with LVMH’s core focus on fashion and leather goods and are now seen as potential candidates for divestment or public listing.
Luxury Industry Faces Dual Pressure
The luxury sector is navigating difficult terrain due to falling Chinese demand, as local consumers shift preferences to domestic brands, combined with US tariffs on European goods. These headwinds are undermining performance across the sector, including at LVMH.
Valuation Gap Grows
While Hermès continues to trade at 50x earnings, LVMH trades at just 20x. This reflects investor discomfort with LVMH’s conglomerate model, especially as growth slows. Subsidiaries like Louis Vuitton, Dior, and Moët Hennessy have faced setbacks in recent months, drawing attention to internal inefficiencies.
Spinoff Candidates: Sephora and Moët Hennessy
Sephora had previously been considered for a 2021 IPO in Amsterdam. Meanwhile, Moët Hennessy — partly owned by Diageo — is under pressure due to falling Champagne and Cognac sales and the EU-China trade dispute. Both brands could be spun off to unlock value and streamline the group.
Leadership and Succession Uncertainty
Founder Bernard Arnault, now 76, has extended the CEO age limit to 85 but has not formally named a successor. Though his five children hold key roles, the lack of a clear succession plan is seen as a risk factor by investors. Delphine Arnault currently leads Dior, which has recently lost momentum. Alexandre Arnault is now focusing on Moët Hennessy after a challenging stint at Tiffany.
Structural Review on the Horizon
Despite strong financials — with over €10 billion in free cash flow in 2024 — investor sentiment is shifting. A portfolio review is being urged, with potential brand divestments and structural simplifications seen as key to restoring growth. After years of expansion by acquisition, LVMH may now enter a phase of strategic separation.
