After a rocky two years, the luxury industry is expected to carry its third-quarter recovery into Q4, despite some tough comparables. Analysts predict that the upcoming round of fourth-quarter earnings will show modest growth broadly in line with Q3, buoyed by the consistent strength of the equity market in the US, signs of stabilization in China and early gains from luxury’s recalibration.
HSBC anticipates a 2.6% increase in global luxury sales in Q4 2025, after a 3.2% increase in Q3, a 0.8% decrease in Q2 and a 0.4% decline in Q1.
Due to the post-election shopping frenzy that unraveled in the US, comparisons to Q4 2024 are more challenging. “The key theme in Q4 2025 is ‘comping the comp’, as investors would put it,” Erwan Rambourg, HSBC global head of consumer and retail equity research, notes. “The comparison basis is more difficult, but I think most companies will not see a big deterioration of trends, despite the base being tougher.”
A two-year stacked analysis is particularly informative. “The investors believe that most of the group will post an improvement on the two-year stack basis, which has given some confidence that from an underlying standpoint, things are getting a little bit better for the sector,” says Morgan Stanley managing director Édouard Aubin.
Other analysts share similar expectations. “Although the recovery is still at an early stage, we believe that Q4 could act as the first proof point,” UBS managing director Zuzanna Pusz wrote in a note.
“With good feedback on Dior supporting LVMH, continuing strength in jewelry supporting Richemont, and with Hermès steady as it goes, I think the probability of a constructive scenario is more than 50%,” says Bernstein managing director Luca Solca.
Stabilization in China, acceleration in the US
The industry is seeing stabilization in China despite ongoing macroeconomic challenges, including weakness in the real estate market and high youth unemployment. Brands are doubling down on initiatives to create interest and traffic. Meanwhile, in the US, the strength of the stock market is boosting luxury demand. “Wealthy individuals in the US are probably feeling even wealthier now, it’s translating into more luxury purchases,” Rambourg notes.
Among the predictions for Q4, Europe and Southeast Asia are anticipated weak spots, due to low tourist spend, while in Japan, recent China-Japan tensions over Taiwan are likely to weigh on Chinese tourist arrivals, according to Rambourg. To wit, the negative impact from currency changes is going to be significant. A strong euro, versus the US dollar and the Chinese yuan, will weigh on European luxury firms, as overseas prices of Europe-made products rise.
All points to a growing focus on the local consumer. “Partly because of how the brands have evolved, partly because of currency fluctuations, the theme is selling to locals,” says Rambourg. “I don’t think there’s much hope that Chinese or aspirational American consumers will come back to Europe. Everywhere in the world, regional managers are focusing on what they can control: local consumers.”
Continued disparity between companies
On Monday, Brunello Cucinelli kicked off the earnings season, posting revenues up 11.9% year-on-year for Q4 2025. Cartier owner Richemont will follow on Thursday, with sales expected to rise 8.3%, after surging 14% in fiscal Q2.
LVMH, the bellwether of the sector, is expected to post a fourth-quarter sales decline of 0.2%, with its fashion and leather goods division down 2.9%, per HSBC estimates. The division’s sales fell 2% in Q3. According to HSBC estimates, Kering sales will fall 5.3%, versus a 5% drop in Q3, with Gucci sales declining 14% and Saint Laurent witnessing a 4.2% fall. Meanwhile, Bottega Veneta is expected to wave the flag for the group, with HSBC predicting a sales uplift of 2.5%; Kering’s Other Houses, which includes Balenciaga, McQueen and Boucheron, is heading for a 0.6% increase.
Hermès is expected to continue in its role as the best in class, with a sales uplift of 9.1% in Q4, versus 9.6% in Q3, per HSBC. Meanwhile, HSBC anticipates Prada Group retail sales to rise 8.4%, Burberry sales to increase 4% and the Moncler brand to climb 2.2%.
The gap begins to narrow
The K-shaped economy — where the top end of the economy grows, but the lower end lags as inequalities widen — is still a theme in Q4, according to Aubin. “Because of the large wealth effect, the brands positioned at the top of the luxury pyramid are outperforming, but I think that the gap will narrow slightly,” he says.
While high-end brands such as Hermès, Loro Piana, Brunello Cucinelli and Cartier have continued to defy the luxury downturn, buoyed by the resilience of ultra-wealthy consumers, labels with middle-income customer bases have been hit hard in past quarters. There are some early signs of recovery. “I don’t think that aspirational customers are the main drivers in Q4, but I think it’s coming,” Rambourg says. “If you look at the repositioning of Burberry, the aspirational consumers who were not involved for the past two years are finally returning off the back of reasonable price points and creativity.”
More reasonable price points
‘Greedflation’, where brands increase prices so significantly that consumers feel their value propositions no longer hold, is a problem of the industry’s own making, analysts agree. Some brands are countering this trend by adjusting their product mixes and introducing lower-priced offerings, and, in turn, possibly boosting Q4 results. “I don’t think there is a significant shift toward launching more accessible price points, but when they do happen, it seems to be working,” says Aubin.
Burberry CEO Joshua Schulman has spearheaded the move away from £3,000-plus handbags, prompting the debut of the brand’s £2,000 B Clip bag on the Spring/Summer 2025 runway. Gucci launched the Giglio, a tote bag whose small canvas edition is priced at $1,850; Dior introduced the D-Journey priced between €3,500 and €5,600 on the Dior website; and Chanel released the Chanel 25. A big version of Chanel 25 is priced at €6,800 on the Chanel website, far below the big Chanel 2.55 at €11,100.
Halo effect
For the houses whose creative directors made their debuts for SS26, a key topic during the earnings calls will be the initial reactions. “We expect investors to focus on the timeline of — and the response to — newness following a multiple creative director reshuffling, especially at Dior,” UBS’s Pusz wrote.
Demna’s La Famiglia collection was available exclusively in 10 Gucci stores, from September 25 to October 12, while Celine’s first collection under Michael Rider began hitting shelves in November. Though, most of the collections were yet to hit stores by the close of Q4. Still, analysts believe that the excitement around the debuts and a renewed burst of creativity had a halo effect, most notably at Dior and Chanel. Jonathan Anderson’s first creations for Dior arrived in stores on January 2, and the in-store arrival of Matthieu Blazy’s debut collection is slated for March 2026.
Bruno Pavlovsky, president of Chanel fashion and Chanel SAS, talks to Vogue Business about its Métiers d’Art show in New York, the house’s return to growth in 2025 and why it won’t launch a dedicated men’s line.
Rambourg says: “ I think this will be the year where sales rebound off the back of traffic, because you finally have reasons to push the door in terms of new products, new media assets, something actually worth checking out. Will you buy products? That’s a different question, but clearly traffic will start to rebound. ”
Stores are ready to welcome the herds. “One of the interesting developments of the fourth quarter is how some of the industry’s leading players are flexing their muscles in terms of retail and raising the bar for the industry,” says Aubin. In Q4, Louis Vuitton opened its largest flagship in the world in South Korea, mixing retail and entertainment, while Dior completed its five-story development in Beijing in December, following a Rodeo Drive store with a restaurant by three-Michelin-star chef Dominique Crenn in the fall.
Looking ahead, HSBC expects the industry to return to a more normalized growth rate this year, broadly in line with the luxury sector’s 6.5% historical average. This will be driven by the US consumer, as well as the gradual improvement in China. However, brands should be wary of currency changes impacting margins.
Will jewelry continue to outpace other luxury segments in 2026? “Investors have two concerns,” Aubin says. “First, gold prices are still materially appreciating. While leading jewelry brands have tried their best to limit raising prices, demand might hit a ceiling and consumers might shift their spending to other goods. Second, more creative directors debuted at leading luxury brands [in 2025] than at any other point in the past 30 years. All of this could create a situation where consumers arbitrage their spending in favor of ready-to-wear, footwear, etc. putting an end to the supercycle of the jewelry category. However, while these are valid concerns, there’s currently no evidence that jewelry’s rate of outperformance has been eroded.”
