A tale of two handbags
...and two luxury stocks
The battle between LVMH and Hermès is playing out on the arm of one of the world’s top luxury analysts at the 2025 FT Business of Luxury Summit. Can you guess which £4,500 bag broke after a month, and which old stalwart is still going strong after 20 years? And which stock is on the rise and which one is currently stagnating? Scroll down to find out.
Barcelona is not a place I associate with high-end luxury. I’ve been going back for years to visit my sister who lives and works in the city as an illustrator, and we’ve shared many €3 bottles (not a typo) of cava bought at La Xampanyeria, scooter rides around the city’s seven hills and late evenings occasionally spent playing a half-broken trombone on the beach.
It was therefore quite a shock to the system packing my tuxedo and getting my Paul Smith suit altered and pressed in order to meet the strict dress code requirements of the Financial Times Business of Luxury Summit this week. Some formality is obviously necessary for an annual gathering of executives from major luxury firms selling luxury fashion, watches, superyachts and private jets, since tickets cost €5,000 each. The FT was nevertheless kind enough to offer me a press pass to attend.
With some notable exceptions, the keynotes, “fireside chats” and panel discussions on stage were thoroughly sanitised. One attendee told me she believe executives had planted easy questions in the audience to make them look good. Off the stage, attendees were generally much more candid. Here’s what we learned from three days of Russell & Bromleys-on-the-ground reporting. We’ll have several more in-depth stories based on our reporting over the next few weeks.
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‘Ouch’
Financial Times CEO John Ridding opened the summit by citing forecasts from consulting firm Bain that the luxury goods sector will contract this year. “Ouch”, he said. Much of the summit focused on trying to understand the underlying reasons why this is happening, and there was lots of discussion about shifts in consumer behaviour, getting more out of extremely wealthy clients and even effective use of AI. Our view is that many of the problems in the industry are actually about the basics: pricing, value and creativity. We think that story can be told through a single story we heard at the event, about a very important person purchasing a highly symbolic handbag.
A tale of two handbags
In luxury, nothing matters more than the Very Important Customer (VIC). These are the high-net-worth clients who spend huge amounts on luxury goods – and who executives obsess about. After all, in luxury just four percent of customers are responsible for more than a third of sales, according to a report from Boston Consulting Group. But at the summit this week, it was clear that even the most critical customers sometimes get overlooked.
Zuzanna Pusz is no ordinary consumer. She heads up research into European luxury goods at multinational investment bank UBS in London, with a reputation respected enough to move markets. Once dubbed “Burberry’s biggest bear”, her recommendations influence billions in investment across Europe’s storied maisons and fashion brands from LVMH, to Hermès, to Kering and beyond.
On stage, during a panel about retail trends, she revealed that she’d recently splurged on a new handbag. “A special treat”, she said. Within days, the handle had broken. “I was quite disappointed”, she said on stage about the incident.
She declined to name the brand in front of the audience of luxury executives, but afterwards, when I caught up with her, she freely offered the brand name of the £4,500 bag: Fendi, which is majority owned by LVMH, which, incidentally, has a neutral “hold” rating at UBS.
Notably, the bag she was carrying that day on stage and while I spoke to her was a second-hand vintage Hermès handbag, bought in Japan. Its handle was intact. “This one’s 20 years old”, she said. “Looks like new”. UBS and Pusz’s rating for Hermès’ stock is currently “buy”.
One broken bag doesn’t damn an entire business, but it is an embarrassing anecdote for LVMH, which has suffered from reports of poor quality in recent years, and from its reputation for driving prices up and up. (I think it also raises questions about the effectiveness of the tracking systems that executives use to cosset their very important customers.)
For Pusz, one of the biggest reasons why share prices are stagnating in parts of the luxury industry and staying solid or rising in others is the decline in the relative value of certain products like her Fendi handbag.
She used a simple mathematical comparison on stage to demonstrate this. Ten years ago, the money to buy a particular bracelet from a popular jewelry brand could buy 1.5 Chanel handbags. Now, it barely covers the cost of one. This might explain why jewellery specialist Richemont’s share price has risen nearly 40 per cent in the last six months, while LVMH and its more leather-goods focused portfolio is barely up one per cent.
Pusz thinks this simple consumer calculation of the value of different luxury goods is being ignored by the industry. “They make all these dramatic statements like, ‘people want to buy experiences now’. I would say, only [if] you think human nature changes”, she said.
Luxury leaders say they know who their best and most valuable customers are. But when one of the industry’s most influential voices buys a bag that breaks within days, it suggests they’re looking in the wrong place.
In this week’s newsletter
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You’ve already read this:
‘Ouch’ - the current state of luxury forecastsA tale of two handbags - which one came out on top?
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Succession issues - and why they matter
Heard and overheard at the summit - which famous celebrity stylist is a “c*nt?”
Why lobbying to restore tax-free shopping in the UK isn’t working
Tariffs, of course
Everything else at the summit
Dior’s disastrous hack, and other news
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Succession issues
There were two very candid anecdotes about how to handle succession problems at the summit, which is a huge issue in the luxury business because so many of the biggest brands in Europe are controlled by families.
Both anecdotes offer food for thought for Bernard Arnault and his sons and daughter, perhaps. LVMH is famously riddled with internecine squabbling amongst the five family members in the running to succeed Arnault, and appointments of dubious quality. For example, look at Alexandre Arnault’s tenure with three years of bad results as vice-president of jewellery brand, Tiffany & Co. He’s since been handed the grim challenge of reviving the drinks and beverage division, currently its worst performing unit.