David Herro’s Bold Stakes in LVMH: A Value Investor’s Bet on Luxury Resilience

David Herro’s 1,614% increase in his LVMH position during Q1 2025—adding 23,600 shares valued at €14.6 million—signals a calculated bet on the luxury goods giant’s long-term resilience. This move, representing 0.11% of Herro’s portfolio, aligns with his philosophy of targeting undervalued businesses with durable competitive advantages and owner-like management teams [1]. LVMH, under CEO Bernard Arnault, has demonstrated a unique ability to navigate macroeconomic headwinds through disciplined cost management, brand innovation, and geographic diversification, even as the broader luxury sector faces a slowdown [4].

LVMH’s financial performance in H1 2025 underscores its operational fortitude. Despite a 4% revenue decline to €39.8 billion and a 15% drop in recurring profits to €9 billion, the company generated €4 billion in operating free cash flow—a 29% increase year-over-year [1]. This resilience stems from its high-margin segments, such as Watches & Jewelry and Perfumes & Cosmetics, which offset weaker performance in Fashion and Leather Goods (down 12% to €22.4 billion) [2]. Analysts attribute this divergence to LVMH’s strategic focus on innovation, including collaborations like Louis Vuitton’s Takashi Murakami collections and Dior’s high-jewelry launches, which reinforce brand desirability [3].

Herro’s investment aligns with LVMH’s long-term value proposition, which hinges on three pillars: brand-led innovation, geographic adaptability, and sustainable growth. The company’s 22.6% operating margin in H1 2025—despite a challenging environment—demonstrates its ability to outperform peers through selective retailing and cost discipline [4]. In China, LVMH has narrowed price gaps post-Hainan duty-free reforms and launched localized campaigns to reinvigorate demand [4]. Meanwhile, its expansion into accessible categories like beauty (e.g., La Beauté Louis Vuitton) and small leather goods targets younger consumers, broadening its customer base [6].

Critically, LVMH’s commitment to human capital and social responsibility further cements its long-term appeal. The Institut des Métiers d’Excellence has trained over 3,300 apprentices since 2014, with 73% joining the company or its partners [5]. Initiatives like mental health support and non-discrimination training reflect a broader strategy to foster inclusivity and employee engagement, which are increasingly valued by investors [5].

While the luxury sector faces a projected recovery timeline of 2026 or later [2], LVMH’s proactive approach to trade tensions and supply chain risks—through localized production and diversified sourcing—positions it to capitalize on market rebounds. With a 10-12% annual earnings growth outlook [4], the company’s valuation appears compelling for value investors like Herro, who prioritize long-term fundamentals over short-term volatility.

In conclusion, Herro’s bold stake in LVMH reflects confidence in the company’s ability to balance heritage with innovation, navigate macroeconomic challenges, and sustain profitability. As the luxury market recalibrates, LVMH’s strategic agility and brand equity make it a compelling case study in resilience—a bet that Herro, and perhaps others, may soon validate.

Source:
[1] Solid results in the first half of 2025 despite the prevailing environment [https://www.lvmh.com/en/publications/solid-results-in-the-first-half-of-2025-despite-the-prevailing-environment]
[2] LVMH's Fashion And Leather Goods Sales Plunge 12-Signaling-A-Broader-Luxury-Slowdown [https://www.forbes.com/sites/pamdanziger/2025/07/27/lvmhs-fashion-and-leather-goods-sales-plunge-12-signaling-a-broader-luxury-slowdown/]
[3] LVMH shows good resilience in the first quarter of 2025 [https://www.lvmh.com/en/publications/lvmh-shows-good-resilience-in-the-first-quarter-of-2025]
[4] LVMH's Strategic Resilience Amid Global Headwinds [https://www.ainvest.com/news/lvmh-strategic-resilience-global-headwinds-buying-opportunity-tumultuous-market-2507/]
[5] Our commitment for People - LVMH [https://www.lvmh.com/en/commitment-in-action/for-people]
[6] Lvmh Moet Hennessy Louis Vuitton SE Earnings - Q2 2025 [https://www.alpha-sense.com/earnings/MC.FR]