How do you survive a recession? Sell $100K handbags to the ultra-wealthy. Nearly two years after the COVID luxury boom started, consumers are still splurging — and luxury stocks are surging:

• Last week, Louis Vuitton owner LVMH and Hermès both reported earnings that knocked ‘em outta the park.
• Hermès saw double-digit growth in all geographies and categories except one (beauty).

They do things differently in Europe

In France, investors speak the language of fashion, not code — where the four largest companies (by market cap) are all luxury brands. UBS analyst Zuzanna Pusz explains (BBG):

• “Luxury is seen as the highest quality sector by investors, in the same way, technology is seen as the best growth sector in the US.”
• “You can’t replicate it, it has high barriers to entry. To succeed, you need to have been around for more than 100 years to leverage that heritage.”

Thank China

Before COVID, Chinese consumers made up nearly one-third of personal luxury spending — a level yet to return.

• But luxury received a major boost near the end of last year after China finally reopened its economy.
• Yesterday, China reported a 4.5% first-quarter GDP growth — the highest in a year.

Déjà vu: “Currently, there’s a phenomenon of revenge pleasure in China,” which has led to a surge in spending and travel — per the founder of intelligence firm Luxurynsight (BBG).

Jamais vu: Over in the US, LVMH is starting to see sales slow — a sign that even the wealthy are pulling back on spending in anticipation of a recession.