French Luxury: Behind the Stock Market Plunge, the Fragility of the Workshops
Major luxury houses have lost a significant portion of their market value since January. But a report shifts the focus to the 38,000 artisanal small and medium-sized enterprises that are the backbone of the French luxury sector and account for the least-covered risks.
The stock market figures are cause for concern. Since January 1, 2026, LVMH has lost 26% of its value, Hermès is down 22%, and Kering posted a net loss of 29 million euros in 2025, with revenue down 13% year-over-year. In total, major publicly traded luxury brands have seen nearly $100 billion in market capitalization evaporate. The sector is going through one of its worst periods since 2008, driven by the conflict in the Middle East—which is paralyzing one of the most dynamic markets—and U.S. tariffs. However, it is not the publicly traded luxury brands that worry experts the most, but rather the ecosystem that fuels them.
As a contributor to a Concorde Foundation report on the luxury goods industry, the consulting firm Exponens draws attention to the invisible backbone of the sector. The French luxury sector accounts for a quarter of the global market, generates 86% of its revenue from exports, and employs nearly one million people. It relies on 38,000 small and micro businesses—including artisanal firms, subcontractors, workshops, and family-run manufacturers—which are the first to absorb shocks without having the resources of large corporations. When a giant’s revenue declines or a geopolitical crisis slows sales, it is this network that pays the price first, due to a lack of cash flow and diversified order books.
Seven Risks That Are Underinsured
In an interview conducted as part of the report, Philippe Delerive, a partner at Exponens and a certified actuary, identifies seven vulnerabilities that are insufficiently insured. The transfer of businesses and expertise tops the list, due to the lack of a succession plan in many workshops, where the departure of a leader takes rare skills with it.
Next come economic dependence on a few major clients, recruitment challenges—with 50,000 to 55,000 unfilled positions in the arts and crafts sector by 2024—and regulatory inflation, as the REACH regulation could call into question century-old processes. Added to these are cyber risks—since luxury brands’ customer databases are prime targets—the fragility of international supply chains, and the lag in digital transformation compared to next-generation Chinese manufacturers. Each of these risks, taken in isolation, could be enough to destabilize a workshop with little room to maneuver.
Intangible Assets Not Covered by Insurance Contracts
The crux of the problem lies in the nature of the assets at stake. Know-how embodied in a single artisan, a brand’s reputation, or a supply chain are not covered by any generic insurance policy, due to the lack of industry-specific provisions tailored to the realities of the luxury sector. These intangible assets, which have become the most strategic in the industry, paradoxically remain the least protected.
“It’s not the major firms that are in immediate danger,” emphasizes Thierry Legrand, CEO of Exponens, “but the companies that make their excellence possible.” For the owners and buyers of these workshops, the financial stakes are real: planning for succession, reducing commercial dependence, securing data, and adapting insurance coverage to assets that the financial markets do not value. As long as these vulnerabilities remain unaddressed, the future of French luxury will be decided as much in the workshop as on the stock market.
The report highlights a paradox. French luxury owes its global influence to companies that export the bulk of their production, yet its resilience depends on family-owned businesses that are rarely equipped to weather a prolonged crisis. According to the authors, consolidating this excellence—which is deeply rooted in regional communities—requires better succession planning, diversification of clients, and protection of data and know-how commensurate with their true value. These are all areas requiring attention to the company’s legacy—areas that business leaders, often preoccupied solely with production, frequently neglect.
