11 hundred million euros, a gap of less than 0.6%.
At the close of the Paris Stock Exchange on 9 month 15 day, L'Oréal's market value was 2031.7 hundred million euros (approximately 2340 hundred million US dollars), and LVMH was 2020.5 hundred million euros (approximately 2330 hundred million US dollars). L'Oréal overtook by a narrow margin, returning to first place in French market value for the first time since 2017; LVMH fell out of the top ten in European market value, ranking 11th.
When a group mainly engaged in beauty overtakes a luxury empire with fashion and leather goods as its profit engine in the capital market, what is truly worth asking is: is the capital market's pricing logic for luxury goods and beauty undergoing a fundamental change?
A gap of 11 hundred million euros, less than 0.6% of either company's market value. How did this gap come about?
● 11 hundred million from falling stock prices
Year to date, L'Oréal's stock price has risen about 5%, while LVMH has fallen more than 35%. But over the past 12 months, L'Oréal has also fallen from 396.8 euros to 379.35 euros, a decline of about 4.4%. In other words, L'Oréal itself is also falling, just much less than LVMH.
In terms of absolute market value, L'Oréal rose from 1954.7 hundred million euros at the end of 2025 to 2031.7 hundred million euros, an increase of about 77 hundred million euros; LVMH fell from about 3145 hundred million euros at the end of 2025 to 2020.5 hundred million euros, a decrease of more than 1100 hundred million euros. The market value gap between the two narrowed from about 1190 hundred million euros at the beginning of the year to 11 hundred million euros.
So, the vast majority of the narrowing gap comes from LVMH's decline. L'Oréal's 5% year-to-date increase is not outstanding in the overall European market environment; what is truly outstanding is LVMH's decline of more than 35%. Since the stock price hit a high of 900 euros in 2023, LVMH's cumulative maximum decline has reached 55%.
● Valuation re-rated
Market value change is the result, valuation change is the cause. As of the close on 9 month 15 day, LVMH's P/E ratio was about 20.4 times, L'Oréal about 33.1 times, a valuation gap of nearly 60%. (P/E ratio can be roughly understood as: how much the market is willing to pay for each 1 euro of net profit). L'Oréal's price is nearly sixty percent more expensive than LVMH's.
A bigger signal comes from EV/EBITDA. LVMH's EV/EBITDA is about 10.6 times, L'Oréal about 20.1 times, a difference of nearly double. (EV/EBITDA can be roughly understood as: how much the market is willing to pay for each 1 euro of EBITDA, often used to compare companies with different capital structures). LVMH's current EV/EBITDA is about 25% lower than its 10-year median of 14.05 times.
It is not difficult to see that the market is reclassifying LVMH, from 'high-growth luxury goods' to 'cyclical consumer discretionary'. In other words, the market no longer treats LVMH as a luxury goods company with perpetual high growth, but begins to measure it with the yardstick of economic cycles.
A noteworthy detail is that LVMH's dividend yield is about 2.7% to 2.9%, higher than L'Oréal's about 1.9%. LVMH's dividend payment ability is not a problem, but the market has not bought because it is cheap. This shows that the market is not worried about LVMH's dividend ability, but about the sustainability of its growth.
Why is the market willing to give L'Oréal a higher certainty premium? The answer lies in the business structures of the two companies.
● L'Oréal: Efficacy-driven divisions lead, but high-end beauty has not stalled
L'Oréal's sales in the first half of 2026 were 237.7 hundred million euros, with comparable internal growth of 6.5% and operating margin of 21.3%, a record high for the first half. All four divisions grew, but growth rates diverged significantly:
Professional Products Division grew 11.6%, Dermatological Beauty Division grew 10.6%, Consumer Products Division grew 4.3%, and Luxe Division grew 5.1%.
The two fastest-growing divisions, Professional Products and Dermatological Beauty, have different paths. Dermatological Beauty sells ingredients and clinical evidence; brands like La Roche-Posay, SkinCeuticals, and CeraVe attract consumers who actively search for efficacy, ingredients, and indications. Professional Products sells salon professional trust; hairstylist recommendations and salon channel endorsement are core. The common point is: consumers no longer pay an unconditional premium for 'big brand halo', but require a clear reason to pay.
But there is an easily overlooked detail: the Luxe Division is also growing, at a rate of 5.1%. Brands like Lancôme, Helena Rubinstein, YSL Beauty, and Armani Beauty mainly sell brand stories and emotional value. This shows that consumers have not given up high-end beauty, nor have they simply downgraded, but are reallocating budgets: efficacy certainty first, brand premium second. The growth rate gap reflects a change in priorities.
● LVMH: Channels healthy, brands under pressure
LVMH's Perfumes & Cosmetics division revenue in the first half was 39.14 hundred million euros, with zero organic revenue growth and a reported decline of 4%. High-end lines such as Dior Beauty and Guerlain had basically stable sales, but competition in the high-end fragrance and cosmetics track is fierce, and brands lack new hit products to drive growth.
But LVMH does not lack growing beauty businesses. The Selective Retailing business, mainly Sephora, achieved organic growth of 5% in the first half, with growth accelerating to 6% in the second quarter, achieving positive growth in key markets such as North America, Europe, the Middle East, and China. This shows that the beauty retail channel itself remains healthy, and the shelves are still there.
The problem lies at the brand end: LVMH's high-end fragrance and cosmetics are under pressure, not because of channels, but because of brands—travel retail inventory is still being digested, gifting scenarios are shrinking, new product innovation is insufficient, and price band competition is intensifying. When consumers walk to the shelves, they no longer unconditionally pick up those high-priced products without new stories.
● China market: where the divergence is clearest
The brand-side problems are more evident in the Chinese market.
L'Oréal's North Asia region achieved organic growth of 4.6% in the first half, with China as the main growth driver, growing at about three times the overall growth rate of the Chinese beauty market. The Luxe Division contributed the most, and the Dermatological Beauty and Professional Products divisions both achieved mid-double-digit growth.
On the LVMH side, the group CFO admitted at the earnings call that demand from local and tourist customers in China was 'basically flat' in the first half, and consumers are increasingly concentrating consumption around shopping festivals.
Putting these signals together, a clearer differentiation emerges: Chinese consumers are not not buying beauty products, but rather reallocating their budgets within beauty. High-end skincare supported by efficacy evidence and haircare with professional trust are growing; high-priced fragrance and cosmetics lacking new stories and emotional value are under pressure. If LVMH's fragrance and cosmetics brands cannot come up with new efficacy narratives or emotional narratives, they will continue to face pressure.
Taken together, L'Oréal overtaking LVMH is not simply the "lipstick effect," but an upgraded version of it: consumers are shifting from big-ticket luxury goods to small self-indulgent purchases; within beauty, from unconditional brand premium to efficacy certainty premium.
It should be noted that fragrance does not apply to efficacy narratives; it relies on emotion, brand, and gifting scenarios. However, the overall market is rewarding "certainty": efficacy skincare with evidence and haircare with professional trust are rising, while high-priced fragrance and cosmetics lacking innovation and emotional value are under pressure.
Is L'Oréal overtaking LVMH a simple shift between the two companies, or is the valuation logic of the entire industry being rewritten? Expanding the view from individual companies to the market capitalization landscape of global beauty groups provides a clearer reference.
1. Dermatological science and medical aesthetics tracks are gaining significant valuation premiums
Among the global beauty market cap TOP10, Galderma ranks fourth with approximately 460 hundred million US dollars, surpassing Estée Lauder's approximately 348 hundred million US dollars.
Galderma is 100% dermatological science business, including medical aesthetics; Kenvue ranks tenth with approximately 94 hundred million US dollars, including skin health business. These two companies are not entirely comparable to traditional daily chemical beauty, but their rankings illustrate one thing: the capital market is paying a premium for "pharmaceutical-grade efficacy certainty," and the premium is not low.
2. Traditional high-end beauty is generally under pressure
LVMH's perfume and cosmetics segment had zero organic revenue growth in the first half of the year, with a reported decline of 4%. This is not an isolated case.
Estée Lauder ranks fifth with approximately 348 hundred million US dollars, lower than Galderma's approximately 460 hundred million US dollars. Three years ago, this would have been almost unimaginable. Estée Lauder has long relied on travel retail, the Chinese high-end market, and brand halo, and is now similarly under pressure. It faces similar difficulties to LVMH's fragrance and cosmetics: over-reliance on travel retail, gifting scenarios, and brand stories, with a lack of breakthroughs in efficacy narratives.
Coty Group's market value is approximately 23 hundred million US dollars, and it has fallen out of the global beauty top ten. The core problem for the former fragrance giant today is over-reliance on licensed brands and a weak moat for its own brands.
Putting these two signals together, L'Oréal overtaking LVMH is no longer an accidental shift between the two companies, but a landmark event: global beauty capital is shifting from brand stories and scale to efficacy certainty, professional channels, and dermatological science.
The essence of this shift is: the market no longer unconditionally rewards brand halo. Skincare with efficacy evidence is rising, haircare with professional trust is rising, dermatological science with clinical backing is rising; while high-priced fragrance and cosmetics lacking innovation and emotional value, as well as traditional high-end beauty relying on travel retail and gifting scenarios, are under pressure.
The next to be revalued may not be L'Oréal or LVMH, but those traditional beauty groups that have not yet found an efficacy certainty narrative.