- LVMH shares plummeted nearly 8% following unexpected Q1 sales dip
- US operations now represent quarter of global luxury revenue
- Proposed 2% billionaire tax could fund France’s green transition
Bernard Arnault, architect of the world’s second-largest luxury empire, issued a stark warning about escalating transatlantic trade disputes during LVMH’s annual shareholder meeting. The billionaire executive criticized EU bureaucratic overreach while revealing contingency plans to shift manufacturing to American soil if tariff negotiations fail.
Industry analysts note this strategy mirrors broader luxury sector trends. Following pandemic-driven e-commerce growth, brands now face pressure to localize production amid geopolitical shifts. Rival Kering recently opened a Gucci workshop in Arizona, while Prada expanded Texas leather goods capacity.
LVMH’s Texas experiment illustrates localization challenges. Despite presidential fanfare during its 2019 launch, the Alvarado facility struggles with skilled labor shortages and supply chain bottlenecks. American craftsmanship requires decades to perfect,admitted Arnault, though he confirmed plans for three additional US workshops by 2026.
The CEO saved sharpest criticism for France’s proposed wealth taxes. Punishing domestic production pushes companies toward friendlier markets,he argued, contrasting Europe’s 25% average corporate rate with America’s 21% federal rate and state-level incentives. This fiscal disparity recently influenced LVMH’s decision to acquire California vineyard Screaming Eagle rather than expand Bordeaux holdings.
Protesters outside the meeting highlighted growing public resentment. Their 12-foot Arnault effigy symbolized accusations that luxury titans prioritize shareholder returns over climate obligations. Environmental groups demand mandatory investments in sustainable materials—a sector where LVMH trails independents like Stella McCartney.
Market analysts identify three critical challenges for European luxury brands: 1) Navigating US-China trade proxies 2) Balancing artisanal heritage with automation 3) Addressing Gen Z’s ethical consumption demands. Those failing this trifecta risk following storied houses like Lanvin into obscurity.
Arnault’s warnings carry particular weight given LVMH’s market influence. With 75 brands spanning wines to watches, the conglomerate’s supply chain decisions impact 500,000 workers globally. Its potential US pivot could accelerate a broader industry exodus from European manufacturing hubs.