41% Margin vs. 12.8% — How Luxury's Big Four Diverged: LVMH, Kering, Hermès, Chanel Over Three Years
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%. We break down the last three years — plus the latest results — for luxury's Big Four, and examine 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; 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%. That's 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
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.) | Single brand (fashion + beauty + jewelry) |
| Core categories | Fashion & Leather Goods, Wines & Spirits, Watches & Jewelry, Selective Retailing, Perfumes & Cosmetics | Fashion & Leather Goods (Gucci, Saint Laurent, Bottega Veneta), Eyewear, Jewelry (Boucheron, Pomellato) | Leather goods (Birkin, Kelly), silk, perfume, watches | Fashion (2.55, Classic Flap), fragrance & beauty, watches & fine jewelry |
There's already a hint in this table — LVMH is the only one of the four with a portfolio spread across five distinct divisions, while the other three are effectively single-brand (or close to it) businesses. And Chanel is 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.
Core 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 | €86.2B | Organic +13% | Net profit €15.2B (+8%) |
| Kering | €19.57B | Reported -4% / comparable -2% | 24.3% |
| Hermès | €13.4B | +21% (constant FX) | 42.1% |
| Chanel | $19.7B | Comparable +15.8% | 34.5% ($6.4B 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.
Core 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 income | Operating margin | Net profit |
|---|---|---|---|---|---|
| 2023 | €19.57B | -4% / -2% (comparable) | — | 24.3% | — |
| 2024 | €17.19B | -12% | €2.6B (-46%) | 14.9% | €1.1B |
| 2025 | €14.7B | -13% / -10% (comparable) | €1.6B (-33%) | 11.1% | -€29M (swung to a loss) |
| H1 2026 | €7.22B | -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.
Core 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 | €13.4B | +21% | 42.1% | €4.31B (+28%) |
| 2024 | €15.2B | ~+17% (based on revenue growth) | 40.5% | €4.6B (+7%) |
| 2025 | €16.0B | +9% | 41.0% (+7%) | €4.5B (+5.5%) |
| H1 2026 | €8.16B | +6.1% | 41.0% | €2.24B (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, and there's no need for discounting, no inventory burden, no brand dilution. Second, a concentrated ownership structure with the founding family holding the bulk of the shares — free of quarterly earnings pressure, the company can maintain a craftsmanship-and-quality-first strategy consistently over the long run. Even in H1 2026, as Chinese demand softened, growth in France, Japan and the Middle East offset it, and the 41% margin held.
Core Insight #4 — LVMH: Portfolio Diversification as a Shock Absorber
LVMH sits between the two extremes — and demonstrates the power of diversification in the process.
| Year | Revenue | Growth (organic) | Operating income (recurring) | Net profit |
|---|---|---|---|---|
| 2023 | €86.2B | +13% | €22.8B (+8%) | €15.2B (+8%) |
| 2024 | €84.7B | +1% | €19.6B (margin 23.1%) | €12.6B |
| 2025 | €80.80B | -1% / reported -5% | €17.75B (-9%) | €10.87B (-13%) |
| H1 2026 | €38.64B | +2% (Q2 +3%) | — | €5.7B (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 (+2%). Where Kering's entire group performance rides almost entirely on Gucci, LVMH can weather one weak 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.
Core 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 | $19.7B | Comparable +15.8% | $6.4B (+10.9%) | $4.73B (+3%) |
| 2024 | $18.7B | -4.3% | $4.48B (-30%) | $3.40B (-28.2%) |
| 2025 | $19.3B | +2% | $4.70B (+5%) | $2.90B (-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 protecting short-term profit. That's a choice only a private company can make so freely. 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.
Summary Comparison — Latest Reported Figures (H1 2026, or FY2025 for Chanel)
| LVMH | Kering | Hermès | Chanel | |
|---|---|---|---|---|
| Latest report | H1 2026 | H1 2026 | H1 2026 | FY2025 (annual, most recent) |
| Revenue | €38.64B | €7.22B | €8.16B | $19.3B (annual) |
| Growth | Organic +2% | Comparable +1% | Constant FX +6.1% | Comparable +2% (annual) |
| Operating margin | ~23% (2025 FY basis) | 12.8% | 41.0% | 24.4% (annual, $4.7B / $19.3B) |
| Margin trend vs. 3 years ago | Gentle decline | Cut in half | Held steady | Fell, then plateaued (34.5% → 24.4%) |
Business Impact — Ownership and Portfolio Structure 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 families (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."
Practical Implications
- Luxury retail/MD teams: When dealing with a supplier concentrated around a single brand — as Kering is around Gucci — don't rely on brand heritage or past performance alone; always check the three-year margin trend. Kering's case shows that brand strength alone can't tell you the real risk.
- Duty-free/department store buyers: For channels carrying Hermès-style supply-constrained brands (sell only what you make), remember that in allocation negotiations, "store curation and service quality" can matter more as leverage than raw sales performance.
- Analysts/investors: When reading results from a private company like Chanel, don't read a falling net profit as "crisis" on its own — read it alongside rising CAPEX and brand investment. Failing to distinguish long-term reinvestment from short-term earnings weakness leads to misreading the story.
- Corporate strategy/M&A teams: LVMH's diversified-portfolio strategy is a useful reference point for domestic retail and consumer-goods conglomerates weighing diversification. But diversification alone isn't enough — as LVMH's case shows, the shock-absorbing effect only works if each division genuinely runs on a different demand cycle (here, wine and jewelry offsetting fashion weakness).
Conclusion
Through 2023, LVMH, Kering, Hermès and Chanel could all be summed up in a single phrase: "the luxury boom." Three years on, these four companies are writing completely different stories within the same industry. Hermès sidestepped the downturn entirely by defending its 41% margin. LVMH absorbed the shock through portfolio diversification and began rebounding in H1 2026. Kering, exposed directly to single-brand risk in Gucci, saw its margin cut in half and is only now confirming a bottom. And Chanel, leveraging its private status, is accepting short-term earnings weakness in exchange for a bet on long-term reinvestment. To forecast the next three years of the luxury industry, it won't be enough to watch revenue growth alone — it will take watching all four of these axes together: portfolio diversification, ownership structure, supply strategy, and reinvestment capacity.
What struck me 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.
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.
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.