Market Overview - French stocks are experiencing weakness due to concerns about the Federal Reserve's rate cuts and high equity valuations as noted by Fed Chair Jerome Powell [1] - The benchmark CAC 40 index is down 20.34 points or 0.26% at 7,851.68 [2] Company Performance - Stellantis is the biggest loser in the CAC 40 index, down 3.4% [2] - Hermes International has decreased nearly 2%, while Renault, EssilorLuxottica, Capgemini, L'Oreal, Euronext, Publicis Groupe, and Saint Gobain are down between 1% to 1.7% [2] - LVMH and Pernod Ricard are both down nearly 1% [3] - Atos SE shares have increased by 4.7% after securing a major cybersecurity contract from the European Commission [3] - Carrefour is gaining approximately 2.3%, while Thales, Bouygues, Kering, and Legrand are up between 1.3% to 1.6% [3]

Core Points - The current wealth tax proposal in France is primarily politically motivated, aiming to address widespread anxiety over wealth distribution in society [1] - The wealth tax debate has resurfaced as a central political issue in France, with significant public demonstrations against government austerity measures [3][4] - The proposed "Zucman tax" targets individuals with net assets exceeding €100 million, suggesting a minimum tax rate of 2%, potentially generating between €10 billion to €25 billion in revenue [1][3] - The wealthiest 75 families in France pay an effective tax rate that is only half of the next income tier, indicating a regressive tax system [5] - Critics warn that the wealth tax could lead to capital flight, as seen in previous attempts to tax the wealthy [5][6] Industry Insights - The wealth tax proposal has been met with strong opposition from business leaders, who argue it could undermine economic freedom and discourage investment [6] - The debate reflects broader economic dissatisfaction among the French populace, particularly in the context of rising inflation and stagnant economic reforms [4][7] - There is a call for a shift in focus from wealth redistribution to expanding the overall economic "cake," emphasizing the need for growth in sectors like digitalization and green energy [7][8]

Group 1 - Bernard Arnault, the chairman and CEO of LVMH, was spotted in Shanghai on September 16, marking his third consecutive year visiting China [1] - During his visit, Arnault and his team visited the Lao Pu Gold store in Shanghai's IFC Mall, where he closely observed various gold items and commented on their craftsmanship as "very exquisite and interesting" [1]

Giorgio Armani names LVMH, EssilorLuxottica and L’Oreal as preferred buyers for a stake in the company, according to a copy of the designer’s will that was opened on Friday https://t.co/W9bp3zfTln ...

Market Positioning & Strategy - LVMH launched a $160 lipstick, generating both positive and negative buzz [1] - The industry observes this as a strategic move to reinforce LVMH's market position and lead [1] - The industry views the success of LVMH's $160 lipstick as uncertain, especially with Hermes setting a high standard with an $80 lipstick [1] Competitive Landscape - The market for $160 lipstick is considered virtually non-existent [1] - Hermes is positioned at the top of the market with an $80 lipstick [1]

Core Viewpoint - LV has launched a high-priced beauty product line, with lipsticks priced at 1200 yuan each, setting a new industry benchmark and sparking significant online discussion [1]. Group 1: Product Launch and Pricing - LV's beauty product line was officially launched on August 20, with a flagship beauty boutique opening in Nanjing [1]. - The lipstick and lip balm are priced at 1200 yuan, while the refill is priced at 510 yuan, significantly higher than competitors like Prada (420 yuan), Celine (590 yuan), Chanel (around 420 yuan), and Dior (400-760 yuan) [1]. Group 2: Market Context and Performance - The luxury goods sector has faced challenges, with Bain & Company predicting a 1% market contraction in 2024 and a further decline of 2%-5% in 2025, potentially marking the largest drop in 15 years [8]. - LVMH's revenue fell by 4% to 39.81 billion euros in the first half of the year, with a 22% drop in net profit to 5.69 billion euros, and a decline of 8% in the fashion and leather goods segment [8]. - Despite the overall downturn, the beauty segment showed resilience, with LVMH's perfume and cosmetics division achieving revenue of 4.082 billion euros, remaining stable [8]. Group 3: Consumer Behavior and Market Trends - High-net-worth individuals are showing stable spending trends in high-end beauty, with a slight growth of 1% [9]. - The global high-end cosmetics and perfume market is projected to reach approximately 63.3 billion USD in 2025, growing to 83 billion USD by 2029 [9]. - Beauty products generally have higher profit margins than traditional luxury goods and are seen as more accessible luxury items, which can help maintain brand loyalty during economic downturns [10].

Core Viewpoint - LV has entered the beauty market with a high-priced makeup line, setting a new industry benchmark with lipstick priced at 1200 yuan per unit, which has sparked significant discussion online [1][4]. Group 1: Product Launch and Pricing - LV launched its beauty product line on August 20, with a flagship beauty boutique opening in Nanjing and global online pre-sales starting on August 25 [1]. - The pricing of LV's beauty products, particularly the lipstick and lip balm at 1200 yuan, significantly surpasses competitors like Prada (420 yuan), Celine (590 yuan), Chanel (around 420 yuan), and Dior (400-760 yuan) [3]. Group 2: Market Context and Financial Performance - The luxury goods sector has faced challenges, with Bain & Company predicting a 1% market contraction in 2024 and a further decline of 2%-5% in 2025, potentially marking the largest drop in 15 years [5]. - LVMH reported a 4% decline in revenue to 39.81 billion euros and a 22% drop in net profit to 5.69 billion euros in the first half of the year, with the fashion and leather goods segment down 8% [6]. - Despite the overall downturn, the beauty segment of LVMH showed resilience, achieving revenue of 4.082 billion euros, remaining stable year-on-year, while the selective retailing segment saw revenue growth of 2% [6][7]. Group 3: Strategic Insights - High-net-worth individuals are showing stable spending trends in high-end beauty, with a slight growth of 1%, indicating a potential market opportunity for luxury brands [9]. - The beauty products generally have higher profit margins compared to traditional luxury goods, and they offer frequent repurchase opportunities, providing stable cash flow [9]. - Economic fluctuations may lead consumers to opt for more accessible luxury items like beauty products instead of high-priced leather goods, helping maintain brand loyalty [9].

Core Insights - LV has launched a new beauty product line, with a global debut in China, indicating the brand's focus on the Chinese market [2][5] - The newly introduced lipstick series is priced at 1200 yuan each, significantly higher than competitors like Hermès and Chanel [5] - The choice of Nanjing for the first standalone beauty store is attributed to the city's strong consumer spending power, with Nanjing Deji Plaza projected to achieve 24.5 billion yuan in sales for 2024 [7] Company Strategy - LV's beauty line, LA BEAUTÉ LOUIS VUITTON, was announced earlier this year, with a creative director from the makeup industry, Pat McGrath [8] - The beauty product line will include 55 lipsticks, 10 lip balms, and 8 eyeshadow palettes, with a planned release in 2025 [8] - LV aims to control production and sales through its global direct retail stores, similar to its strategy for its fragrance line [8] Market Context - LVMH's beauty division is one of the few segments showing positive growth, alongside its Sephora retail division [8] - Although specific revenue figures for LV's beauty products are not disclosed, third-party data suggests significant contributions from beauty sales in the luxury market [8] - The global luxury cosmetics and fragrance market is projected to grow from approximately $63.3 billion in 2023 to $83 billion by 2029 [8]

Core Viewpoint - The European luxury goods industry is facing significant challenges due to currency fluctuations and tariff policies, leading to a decline in stock prices for major luxury groups and a slowdown in market growth [3][4][7]. Group 1: Market Performance - Major luxury groups such as LVMH, Hermès, Richemont, and Kering have seen stock price declines of 26.31%, 17.98%, 19.84%, and 13.33% respectively over the past six months [3]. - The MSCI Europe Textile, Apparel, and Luxury Goods Total Return Index has dropped 17% year-to-date, underperforming the broader market by 27% [3]. - NDR's report indicates that the luxury goods sector's growth is slowing, partly due to the fading benefits of favorable exchange rates and the impact of U.S. tariff policies on global consumer confidence [3][4]. Group 2: Financial Results - LVMH reported a 4% decline in revenue and a 22% drop in net profit for the first half of the year, with recurring operating profit down 15% [7]. - Kering's second-quarter sales fell 15% to €3.7 billion, with Gucci's sales down 25% to €1.46 billion [7]. - Hermès experienced an 8% sales growth in the first half, significantly lower than the 15% growth reported in the previous year [7]. Group 3: Structural Challenges - The luxury goods sector is facing deeper structural challenges, including weak consumer confidence and brand value dilution, leading to a loss of approximately 50 million consumers over the past two years [11][12]. - The Z generation has seen a 7% decline in sales, equating to a loss of $5.7 billion in consumption, marking the largest drop among all generations [11]. - High-net-worth individuals are becoming more discerning in their luxury purchases, focusing on value and personalized services [11]. Group 4: Future Outlook - Bernstein has revised its global luxury goods revenue growth forecast for 2025 from an increase of 5% to a decrease of 2% [12]. - UBS estimates that luxury brands have increased prices by an average of 33% from 2019 to 2023, which may have overstretched market tolerance [12]. - Following a trade agreement between the U.S. and Europe, a 15% baseline tariff on luxury goods imported from Europe is expected to raise prices in the U.S. by an average of 2% and globally by about 1% [12].

Core Viewpoint - The European luxury goods sector is facing significant challenges, with major companies experiencing double-digit stock price declines over the past six months due to currency fluctuations and tariff policies [2][5]. Group 1: Stock Performance - The stock prices of the four major European luxury groups—LVMH, Hermès, Richemont, and Kering—have dropped by 26.31%, 17.98%, 19.84%, and 13.33% respectively [2]. - The MSCI Europe Textiles, Apparel & Luxury Goods Total Return Index has decreased by 17% year-to-date, underperforming the broader market by 27% [2]. Group 2: Economic Factors - The luxury goods market's growth slowdown is attributed to the fading benefits of favorable exchange rates and the impact of U.S. tariff policies on global consumer confidence [2][3]. - The euro's appreciation has pressured exports to the U.S., contributing to a weak performance in European stock markets [3]. Group 3: Company Financials - LVMH reported a 4% decline in revenue and a 22% drop in net profit for the first half of the year, with a 15% decrease in recurring operating profit [5]. - Kering's second-quarter sales fell by 15% to €3.7 billion, with Gucci's sales down 25% to €1.46 billion [6]. Group 4: Consumer Behavior - The luxury sector has lost approximately 50 million consumers over the past two years, representing one-eighth of the global high-end consumer base [8]. - The Z generation's spending decreased by 7% in 2024, equating to a loss of $5.7 billion, marking the largest decline among all age groups [8]. Group 5: Future Outlook - Bernstein has revised its growth forecast for the luxury goods industry, projecting a 2% decline in global luxury revenue by 2025, down from a previous estimate of 5% growth [9]. - UBS estimates that luxury prices have increased by an average of 33% from 2019 to 2023, with new tariffs potentially raising prices in the U.S. by an average of 2% [10].