If you think about luxury items, the biggest company in the world is LVMH headquarter in Paris, France. In theory, as long as a luxury brands continues to stand for all the things that make it a luxury, adding a price increase should be relatively easy.

In an article by Tassilo Hummel and Mimosa Spencer of Reuters, LVMH CEO Bernard Arnault plans to open a second factory in Texas, while the luxury group is anticipating a good outcome between talks between Europe and the US (it came in at 15%). The second factory is expected to open by 2027, the first plant also in Texas was opened in 2019.

The company reported lower-than-expected quarterly sales with its core fashion and leather division losing further ground as the group struggles to shake off consumer fatigue.

One of the key markets for luxury goods is China, LVMH opened a new store in Shanghai in the shape of ship (interesting architecture design) and sales have been good.

After years of aggressive price hikes, LVMH billion-dollar legacy brands are facing increasingly stiff competition from more affordable mass-market brands such as Coach and Ralph Lauren as well as innovative smaller labels such as Prada’s Miu Miu.

LVMH sales for the second quarter to the end of June were $31.28 billion falling short of a consensus forecast for a 3% decline. Sales at the group’s fashion and leather division, accounting for the bulk of the profits, were down 9%, below expectations for a 6% drop.

Linking to dividend paying stocks, every industry has to protect its margins and even though it seems some industries have it easier than others, they have their ups and downs. With luxury brands, the companies have to maintain the image and the reasons why the brands are luxury so people are both repeat customers and aspirational for new customers. As an investor, the simple question is do you like the brand? If not, find alternatives.

There are more questions than answers, till the next time – to raising questions.