Europe's Luxury Giants Lose €250 Billion as China's Shoppers Retreat

Europe's Luxury Giants Lose €250 Billion as China's Shoppers Retreat

Missed forecasts across the board confirm a multiyear slump

Europe's top luxury groups have shed about €250 billion in market value this year as spending by Chinese consumers wilts and wobbly global share markets depress demand for high-end shoes and handbags. Results this month from LVMH, Hermes and Gucci owner Kering all missed market expectations that had already been cut significantly, confirming fears that the luxury industry remains in the grip of a multiyear downturn.

LVMH grows just 1 percent as Asia slides 5 percent

LVMH's third-quarter organic sales rose just 1 percent from a year earlier to €18.5 billion ($20.7 billion), missing the Visible Alpha consensus for 1.3 percent growth. Sales in Asia, dominated by China, fell 5 percent, while sales in the United States rose 5 percent. The flagship Fashion & Leather Goods division recorded a 5 percent organic decline. LVMH shares are down roughly 40 percent so far this year, among the weakest in the sector. Chief Financial Officer Cecile Cabanis told analysts that Asia was penalised by a sharp macro-led deterioration in Chinese consumer sentiment, with a tangible impact on discretionary expenses. She later put the decline in Chinese demand at around 15 percent. Chinese consumers account for roughly a fifth of global luxury purchases and were long the engine of the sector's growth.

Even Hermes stumbles as accessories turn negative

Birkin bag maker Hermes posted softer growth than expected as sales in its ready-to-wear and accessories division fell for the first time in years on weak demand in China. Third-quarter revenue came to €4.096 billion, up 5.5 percent as reported but only 4.3 percent at constant exchange rates, below the 5.2 percent analysts expected and the FactSet call for €4.13 billion. Growth had been 6.7 percent in the second quarter, making this the weakest quarter since early 2020. Asia-Pacific excluding Japan rose 3.8 percent as reported but was flat at constant rates; Japan rose 3.4 percent as reported and 9.6 percent at constant rates. Leather goods and saddlery, the largest division, grew 12.4 percent, with strength in the Americas, Europe and Japan partly offsetting weakness in China and the Middle East. Nine-month revenue reached €12.26 billion, up 2.9 percent reported, with currency swings cutting about €310 million from sales. The shares ended the session down nearly 5 percent.

Gucci sinks 6 percent and drags Kering down double digits

Kering's third-quarter revenue was €3.35 billion, stable on a reported basis and down 1 percent on a comparable basis, roughly in line with the €3.34 billion consensus. But Gucci, the star brand and profit engine, missed forecasts with revenue of €1.29 billion, down 4 percent as reported and 6 percent on a comparable basis, worse than the 5.4 percent fall analysts expected. Retail sales dropped 9 percent on a comparable basis as lower traffic weighed on Asia-Pacific, particularly mainland China, and Japan. North America was Gucci's most resilient market, with conversion, average price and average ticket all improving. Chief Executive Luca de Meo said third-quarter revenue reflects the phasing the group anticipated, in a softer macroeconomic environment. Kering shares tumbled about 12 percent after the report.

Wealth destruction and the second-hand shift point to structural change

Behind the sales misses sits a harsher Chinese consumer reality. The CSI 300 index, tracking China's 300 largest listed companies, has fallen 19 percent over the past four months, wiping out more than $2 trillion in value and directly denting the spending power of affluent luxury buyers. Retail sales rose just 1.1 percent in September from a year earlier, up from 0.4 percent in August but far below third-quarter GDP growth of 4.5 percent and industrial output growth of 5.5 percent. Bain & Company estimates mainland China's personal luxury market contracted another 3 to 5 percent in 2025 after plunging 18 to 20 percent in 2024, while the second-hand luxury market grew 15 to 20 percent; Chinese consultancy Insight & Info Consulting estimates that second-hand market reached 38.4 billion yuan ($5.7 billion) in 2025 and could top 100 billion yuan by 2030. European luxury shares have lost more than 20 percent on average in 2026. Emerging from a slowdown now in its third year will hinge on when wealthy Chinese spending returns, with analysts watching whether demand worsens again in the fourth quarter or extends September's improvement.