Luxury faced a rocky start to 2025, but there are emerging signs of a rebound.
Analysts predict that the upcoming round of third-quarter earnings will show modest growth, buoyed by the US wealth effect, a stabilisation in China and a surge in creative momentum across the industry. The fourth quarter is expected to soften, as year-on-year comparisons prove tougher after last year’s post-election US rebound. Even so, luxury sales are projected to stay in positive territory, giving the second half of the year a lift after a sluggish first six months.
HSBC anticipates a 1.3 per cent increase in global luxury sales in Q3, after a 0.8 per cent decrease in Q2 and a 0.4 decline in Q1. “The sector wasn’t doing very well in the first half of the year, and it’s doing slightly better in Q3. Investor interest is starting to rebound a bit,” says Erwan Rambourg, HSBC global head of consumer and retail equity research.
Other analysts share the same expectations. “The third-quarter earnings are likely to continue to be contrasted between brands, but with a sense that the worst is behind us,” Bernstein luxury goods analyst Luca Solca says. Mario Ortelli, partner at Ortelli Co, predicts that Q3 will be a “decent quarter in the US, while the Asian market is not getting worse”.
Stabilisation in China, growth in the US
The macro environment in China remains challenging, says Rambourg, though he cites a “mechanical improvement”, meaning it’s a question of basis of comparison. “The property market is still difficult, youth unemployment is still difficult, but at some stage you start to see signs of stabilisation. So seemingly, the industry is starting to find the level.”
Rambourg continues: “Even if most brands are negative, they are a lot less negative [in Mainland China] than in the previous two quarters. Some brands are likely positive. I am thinking particularly about Louis Vuitton — you had the opening of the Louis flagship in Shanghai and lots of buzz, the makeup launch, the Express handbag launch, and the new media campaign filmed in China. Lots of activity.”
Charles-Louis Scotti, head of luxury goods equity research at Kepler Cheuvreux, notes good numbers for the luxury sector in Hong Kong in Q3 on an easy comparison basis. Last year, Chinese tourists favoured Japan to benefit from a weak yen. But now, local consumption is under pressure as luxury brands have increased prices to bridge the Japanese price gap. South Korea shows signs of improvement, Scotti adds.
The US market has driven luxury’s growth in Q3, now that the uncertainties about tariffs have faded. “The stock market was very choppy, notably in April around so-called ‘Liberation Day’ [when President Donald Trump introduced his tariffs plan]. Now, equity markets are at all-time highs and have been for two, three months already,” Rambourg says.
“The good surprise came from the US in Q3, and the brands with a strong American presence performed the best,” confirms Scotti. He cites the stock market, lower rates and the dollar recovery. “The sector was worried that if the euro kept strengthening, it would require significant price increases in the US. But the dollar has been stabilising somewhat since August, and that’s eased some of those concerns.”
“As per channel checks, credit card data and luxury mall data, spending on personal luxury goods has been accelerating in the US in recent months,” Morgan Stanley managing director Édouard Aubin wrote in a note on 6 October. “However, outside of the US, demand has remained much more subdued so far.”
Continued disparity between companies
LVMH, the bellwether of the sector, publishes its earnings on Tuesday. It is expected to post Q3 sales down 0.8 per cent, with the fashion and leather goods division down 4 per cent, per HSBC estimates. That marks an improvement: the division’s sales were down 9 per cent in Q2. This is mainly due to the progress made by Louis Vuitton. “We think Louis Vuitton is outperforming the division average of -4 per cent, Dior is still underperforming, while Loro Piana, Loewe and Rimowa are doing very well,” says Rambourg.
Kering is also expected to show significant improvement. According to HSBC estimates, Kering sales will be down 7 per cent, versus a 15 per cent drop in Q2, with Gucci down 12 per cent (it was down 25 per cent in H1). “Gucci has launched quite a few handbags at more palatable price points, the Giglio, the Siena, the Beatrix, so you’re starting to have a bit of a wake up in terms of traffic. They didn’t wait for Demna to start to rebuild the product and pricing architecture, and that’s starting to move the needle again,” Rambourg explains.
It’s not just an easy comparison basis for Kering. “Some brands are starting to regain strength, particularly Saint Laurent in the US. Saint Laurent is doing a lot of work to renew its iconic products and there’s a solid launch plan,” says Kepler Cheuvreux’s Scotti.
Hermès and Richemont are expected to continue to be the best in class, with growth in line with Q2, meaning respective uplifts of 9 per cent and 6 per cent in Q3, per HSBC estimates.
“Growth is still being driven by [higher value] leather goods,” says Scotti on Hermès. “Other categories that are positioned as slightly more aspirational [such as beauty and silk] are somewhat under pressure. Overall, this represents one of the top-performing results in the sector.”
Analysts say Richemont’s growth may have been lifted by some anticipated orders from wholesalers in the US ahead of the tariffs implementation. The US imposed 39 per cent tariffs on products from Switzerland on 1 August. Analysts also note that Richemont’s houses implemented some price increases to offset uplifts in gold and currency fluctuations (Richemont has a global policy approach), which also supported organic growth.
Moncler brand sales are expected to be down 2.3 per cent, negatively impacted by wholesale. Prada Group retail sales are anticipated to rise by 8.2 per cent, per HSBC. Meanwhile, Miu Miu is likely to continue its hot streak, despite a growth deceleration to around 30 per cent, according to Kepler Chevreux. The comparison basis is tough: Miu Miu’s revenues were up 105 per cent year-on-year in the third quarter of 2024.
Looking ahead to the fourth quarter, Solca says: “The early cold spell could help soft luxury, I wouldn’t expect fireworks from it though. It’s more of the same, and with the added burden of more difficult comps.”
Bold new looks will boost footfall
One key topic that will be discussed during the earnings calls will be the all-important Spring/Summer 2026 season. As a dozen designers made their debuts at significant houses, analysts and investors have never watched the runway more closely. So will this fresh surge of creativity help the industry rebound when collections hit stores in early 2026?
“The most convincing fashion shows have been Chanel, Bottega Veneta, Dior and Margiela,” says Bernstein’s Solca. “I’d expect quite an exciting first half of 2026, at least in terms of newness. Global demand should also be improving.”
The effect of this renewed burst of creativity may be heightened by the growing sense that fashion is shifting away from quiet luxury, according to Aubin. “Should this pendulum swing [towards more colours and a maximalist aesthetic] be established, it would mean more than just consumers having to redo — or at least expand — their wardrobes,” he writes.
What’s also noteworthy is that the designers paid particular attention to accessories, a category that drives sales and profits. Think of Anderson’s new Cigale bag with a little bow at Dior and his bold shoes, created alongside design director Nina Christen; the new crushed version of the 2.55 at Chanel; and Demna’s slouchier version of the Jackie bag at Gucci.
These new products are sure to at the very least reignite customers’ curiosities and bring them back to the stores, analysts predict. “Everyone is quite excited about what it can do for footfall [and] traffic generation,” says Rambourg. “Will people buy Demna [at Gucci], Jonathan Anderson [at Dior]? We don’t know. But as long as you get people in the door, you’ve got a good shot at a sales rebound.”
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