Dior J’adore

We’ve started to build a position in Christian Dior within our European Value Fund.

The rationale? The luxury sector has been a serial underperformer over the last 15 months, with a 20% drop since its peak in early 2024. That’s not a surprise — Chinese demand remains subdued, macro headwinds persist, and tariffs add uncertainty. Even LVMH, the long-time champion of the sector with iconic brands like Louis Vuitton, Dior, and Bulgari, has lost some of its shine. From trading at a sector premium, it now finds itself at a rare sector discount and floor valuation of under 20x forward earnings — levels not seen in years.

We are using this opportunity to invest indirectly into LVMH through Christian Dior, the listed holding company of the Arnault family. It comes with a 17% holding discount, offering long-term investors like us access to discounted quality.

Beyond valuation, some signs point to a bottoming: earnings have stabilized, sentiment is overly negative and historical patterns suggest recovery potential. Several sell-side houses have recently upgraded the sector, citing attractive entry points and macro resilience in the US.

Yes, challenges remain. China’s weakness, FX volatility, and tariff noise still cloud the picture. But these risks, we believe, are now largely reflected in the price.

At ECP, we invest with a margin of safety. And when luxury goes on sale, we take a closer look.