41% vs. 12.8% Operating Margins — Why LVMH, Kering, Hermès, and Chanel's Three-Year Results Diverged
2026-08-26 8:17 PMFashion & Luxury
Overview
In 2023, Louis Vuitton, Gucci, Hermès and Chanel all posted record results side by side. Three years later, in H1 2026, Hermès is still running a solo lap at a 41% operating margin, while Kering has collapsed to 12.8%. This piece breaks down the last three years — plus the latest results — for luxury's Big Four (LVMH, Kering, Hermès, Chanel), and examines why resilience diverged so sharply within the same industry, through the lens of ownership structure and portfolio design.
2023 was a year the entire luxury industry celebrated together. LVMH posted organic revenue growth of +13% for a record year, Hermès grew +21% at constant exchange rates, and Chanel grew +15.8%. It was the last burst of pent-up post-pandemic spending finally breaking loose all at once. Three years later, laying the H1 2026 scorecards side by side reveals a gap so wide it's hard to believe these companies belong to the same industry. Hermès is still running a solo lap, holding a 41% operating margin, while Kering — home to Gucci — has sunk to 12.8%, a margin cut in half from the 24.3% it posted just three years ago. Why did companies in the same category called "luxury" end up telling such different stories?
Four Different Starting Points for the Big Four
Before comparing the numbers, it's worth laying out the basic structure of each of the four companies.
LVMH
Kering
Hermès
Chanel
Ownership
Public (Euronext Paris), controlled by the Arnault family
Public (Euronext Paris), controlled by the Pinault family
Public (Euronext Paris), founding family holds an overwhelming stake
Private — 100% owned by the Wertheimer brothers
Reporting cadence
Quarterly
Quarterly
Quarterly
Annual only (no half-year results)
Brand structure
75 brands across 5 business divisions
Effectively Gucci-centered, plus Saint Laurent, Bottega Veneta, etc.
Single brand (expanded across leather, silk, perfume, etc.)
There's already a hint in this table — LVMH is the only one of the four with a portfolio spread across five divisions, while the other three are effectively single-brand (or close to it) businesses. And Chanel is entirely private, so it has no obligation to disclose quarterly results at all. This difference is the fundamental backdrop for the divergent "crisis response" we'll see next.
The same French luxury conglomerates, but their three-year earnings trajectories ran in opposite directions
Key Insight 1 — 2023 Was Everyone's Peak
Line up three years of results and it becomes clear that 2023 was the high point for all four companies.
Company
2023 Revenue
2023 Growth
2023 Operating Margin
LVMH
€86.2bn
Organic +13%
Net profit €15.2bn (+8%)
Kering
€19.57bn
Reported -4% / comparable -2%
24.3%
Hermès
€13.4bn
+21% (constant FX)
42.1%
Chanel
$19.7bn
Comparable +15.8%
34.5% ($6.4bn operating profit, +10.9%)
Interestingly, even at this point Kering's reported revenue was already declining -4% — while the other three companies were posting double-digit growth, Gucci had already passed its peak. On the surface it was "the year of the luxury boom," but the cracks had already begun forming.
Key Insight 2 — Kering's Collapse: A Margin Cut in Half in Three Years
The most dramatic collapse, by far, belongs to Kering.
Year
Revenue
Growth
Operating profit
Operating margin
Net profit
2023
€19.57bn
-4% / -2% (comparable)
—
24.3%
—
2024
€17.19bn
-12%
€2.6bn (-46%)
14.9%
€1.1bn
2025
€14.7bn
-13% / -10% (comparable)
€1.6bn (-33%)
11.1%
-€29m (swung to a loss)
H1 2026
€7.22bn
-3% reported / +1% comparable
€921m
12.8%
€189m
Over three years, revenue shrank 25%, the operating margin was cut from 24.3% to 11.1% — more than half — and in 2025 the group swung to a net loss (-€29 million) outright. The cause is unmistakably Gucci: even in H1 2026, Gucci revenue was still down 9% (reported), and this single brand — which accounts for a large share of the group's total revenue — dragged the entire group down with it as it fell. Still, H1 2026 brought the first hints of a turn: group-wide comparable revenue flipped positive (+1%) and the margin edged up from 12.4% to 12.8%, the first improvement in three years.
Key Insight 3 — Hermès: The One Company That Doesn't Know Crisis
On the opposite end sits Hermès. Over the same three years, its revenue and profit never once declined.
Year
Revenue
Growth (constant FX)
Operating margin
Net profit
2023
€13.4bn
+21%
42.1%
€4.31bn (+28%)
2024
€15.2bn
~+17% (estimated, based on revenue growth)
40.5%
€4.6bn (+7%)
2025
€16.0bn
+9%
41.0% (+7%)
€4.5bn (+5.5%)
H1 2026
€8.16bn
+6.1%
41.0%
€2.24bn (essentially flat)
Growth decelerated gently, from 21% to 9% to 6.1% — but the operating margin never left the 40-42% band across all three years. That's the exact opposite of Kering's slide from 24.3% to 11.1% over the same period. Two things explain it. First, an extreme supply-constraint strategy embodied by the Birkin and Kelly bags — make only what you make, sell no more than that, so there's no need for discounting, no inventory burden, and no brand dilution. Second, a concentrated ownership structure with the founding family holding the bulk of the shares, which lets the company hold to a craftsmanship-and-quality-first strategy consistently over the long run without being shaken by quarterly earnings pressure. Even in H1 2026, as Chinese demand softened, growth in France, Japan, and the Middle East offset it, and the 41% margin held.
Key Insight 4 — LVMH: Portfolio Diversification as a Shock Absorber
LVMH sits between the two extremes, and it's also a case study in the power of diversification.
Year
Revenue
Growth (organic)
Operating profit (recurring)
Net profit
2023
€86.2bn
+13%
€22.8bn (+8%)
€15.2bn (+8%)
2024
€84.7bn
+1%
€19.6bn (margin 23.1%)
€12.6bn
2025
€80.80bn
-1% / reported -5%
€17.75bn (-9%)
€10.87bn (-13%)
H1 2026
€38.64bn
+2% (Q2 +3%)
—
€5.7bn (flat)
LVMH also declined after 2023, but far more gently than Kering (three-year revenue -6% vs. Kering's -25%). The key is diversification across five business divisions. In H1 2026, Fashion & Leather Goods remained weak (-5% reported), but Wines & Spirits (+5%, profit +11%), Watches & Jewelry (+9%, profit +9%), and Selective Retailing (+5%, profit +2%) offset it, flipping the group back into organic growth of +2%. Where Kering's entire group performance rides almost entirely on Gucci, LVMH can weather a shock in one division because the other four are still standing. The fact that Q2 growth was +4% excluding the impact of the Middle East conflict also suggests LVMH's exposure to geopolitical risk is comparatively manageable.
Key Insight 5 — Chanel: Revenue Rebounded, But Net Profit Fell Even Further
Chanel is private, so it has no half-year results — "H1 2026" data simply doesn't exist for it. The most recent public figures are its FY2025 annual results, released in May 2026. And that scorecard is oddly puzzling.
Year
Revenue
Growth
Operating profit
Net profit
2023
$19.7bn
Comparable +15.8%
$6.4bn (+10.9%)
$4.73bn (+3%)
2024
$18.7bn
-4.3%
$4.48bn (-30%)
$3.40bn (-28.2%)
2025
$19.3bn
+2%
$4.70bn (+5%)
$2.90bn (-14.3%)
In 2025, revenue rebounded (+2%) and operating profit rose modestly (+5%) — yet net profit fell even further, down 14.3%. The recovery in revenue and operating profit didn't flow through to the bottom line. The company said it spent $2.4 billion on brand activities and raised capital expenditure 43% year over year to $1.755 billion — meaning it's aggressively reinvesting in long-term brand equity and production infrastructure rather than in short-term profit. That's a choice only a private company can make. A public company posting a double-digit net-profit decline would have seen its stock swing wildly; Chanel doesn't have to answer to quarterly earnings calls or a share price.
Business Impact — Ownership Structure and Portfolio Decide Resilience
Overlay the four companies and two clear axes emerge. The first is portfolio diversification. LVMH (five divisions) can absorb a shock in one division, while Kering — effectively dependent on a single brand, Gucci — collapses along with it when that brand falters. The second is ownership structure and market pressure. Hermès and Chanel are either majority-controlled by their founding family (Hermès) or entirely private (Chanel), which frees them from quarterly earnings pressure and lets them sustain "slow" strategies like supply constraint and long-horizon reinvestment. Kering and LVMH, by contrast, are public companies subject to the market's quarterly judgment, meaning any growth slowdown feeds directly and immediately into stock and margin pressure. In the end, these three years weren't really a test of "who makes better products" — they were a test of "who built a structure resilient enough to withstand a crisis." In RIT's view, this same question remains just as valid for forecasting the next three years. It isn't enough to watch revenue growth alone — telling which company will falter next from which will hold requires looking at all four axes together: portfolio diversification, ownership structure, supply strategy, and reinvestment capacity.
✦RIT's Insights
What struck RIT most in this comparison is that Hermès' 40%-plus margin never wavered, not once, across three full years. That can't be explained simply by saying "the brand is strong." Choosing not to make more Birkin bags, even though it could — and, as a result, never needing a sale, never carrying excess inventory — is a strategy that's only possible when preserving scarcity is prioritized above maximizing growth. That Hermès held this principle for three years despite being a public company also says something about how firm the founding family's grip on the company remains, even against market pressure to grow. Anyone handling a supply-constrained brand like Hermès at a duty-free operator or department store should carry this same structure into negotiating strategy — the negotiation shouldn't be about asking for more volume, but about proving, through store curation and service quality, that you deserve the allocation you get.
Kering's collapse should be read as a warning for Korean retail and fashion companies too. A structure where group performance depends on a single brand (or a small handful) is efficient when that brand is thriving, but leaves no cushion the moment it turns. That's the exact contrast with LVMH, which offset fashion weakness with wine and jewelry across five divisions. Any domestic company whose results are similarly concentrated in one brand or category should treat Kering's three years as a cautionary tale. Anyone working in luxury distribution or MD should get in the habit of checking a supplier's three-year margin trend alongside its brand heritage and past performance whenever that supplier is as concentrated in a single brand as Kering is in Gucci — because Kering has just proven, in practice, that brand strength alone can't tell you the real risk. That said, anyone in corporate strategy or M&A looking to LVMH's diversification as a model should keep one thing in mind: diversification by itself isn't a cure-all — the shock-absorbing effect only works if the different divisions genuinely run on different demand cycles. LVMH's case, where wine and jewelry offset fashion weakness, was exactly that kind of situation.
Finally, Chanel's case is a fascinating counter-example of "the power of staying private." Raising CAPEX 43% even as net profit fell 14.3% is a choice only available to a company free of quarterly earnings pressure. This comparison makes clear that whether a company is public isn't just a difference in how it raises capital — it fundamentally changes how much freedom it has in how it responds to a crisis. In practical terms, when reading results from a private company like Chanel, a falling net profit shouldn't be read as "crisis" on its own — check whether CAPEX and brand investment rose alongside it, and that's what lets you tell a genuine deterioration in performance apart from a deliberate choice to invest for the long term.
