Luxury sector faces deepening crisis

The luxury sector is experiencing a worsening crisis, with the largest European companies losing nearly 251 billion euros in market capitalization this year, according to the Financial Times. This decline reflects growing challenges in key markets and shifting consumer behavior.

Chinese demand for luxury goods drops

Chinese consumers are turning away from luxury products, and stock market fluctuations are reducing demand for high-end shoes and handbags. This shift has been particularly impactful given that Chinese demand was the main driver of the luxury industry for more than a decade.

Major European luxury firms report losses

Recent results from LVMH, Hermès, and Gucci, owned by Kering, disappointed markets, confirming concerns about a slowdown in the luxury sector that is becoming entrenched. The value of the six largest European companies in the sector listed on the stock exchange, including Richemont, Prada, and Moncler, has collectively declined.

French luxury giants see sharp declines

The most significant declines concern the two French flagship companies, LVMH and Hermès, whose values have respectively decreased by 131.6 billion euros and 93.3 billion euros. Sales in China have declined by 10 to 20 percent, highlighting the sector’s reliance on the Chinese market.

Chinese economic challenges affect luxury demand

The Chinese economy is not emerging from a real estate slump, and household morale is down, with monthly growth in retail sales not exceeding 0.5 percent over the last six months. The return of Chinese appetite for luxury is still awaited, despite efforts by companies like LVMH and Kering to adapt.

Some luxury products remain in demand

The only survivors are the Birkin bags and other high-end models at Hermès, whose sales have increased by 10.8 percent, and jewelry brands such as Tiffany (LVMH group) and Boucheron (Kering), for which demand remains strong. This suggests that while the broader luxury market is struggling, certain high-end items continue to attract buyers.