Nasdaq-beating multiples threaten to cool Europe’s luxury sizzle

Consumers flush with cash after almost 18 months of on-again-off-again lockdowns may be ready to splurge on a Louis Vuitton bag or a Hermes scarf or a Chanel jacket

'These companies are Amazon-proof, they know how to protect their brands'. File Picture

Europe’s purveyors of luxury are heading into risky territory.

Stellar earnings, merger and acquisition speculation and the promise of post-lockdown demand have sent shares of companies like LVMH and Hermes International rocketing to all-time highs, giving them multiples far richer than the Nasdaq 100. Their average price-to-earnings premium to Wall Street’s tech-heavy benchmark hit a record of 29% this month, and is prompting some investors to question how much more steam their rally has.