China Downturn Wipes €251bn From Luxury

Europe’s leading luxury houses have lost a combined €251 billion in market value this year, as weaker spending in China undermines hopes of a sector recovery. The decline is exposing a widening divide between brands selling scarce, high-priced products and those more dependent on occasional luxury shoppers.

The losses span six major listed groups: LVMH, Hermès, Kering, Richemont, Prada and Moncler. LVMH alone has shed an estimated €131.6 billion in market capitalisation, while Hermès has lost €93.3 billion. The figures reflect falling investor confidence rather than an equivalent reduction in company sales.

Recent trading updates explain the pressure. Kering recorded third-quarter revenue of €3.35 billion, down 1% on a comparable basis, as Gucci sales fell 6%. Hermès continued to grow, reporting a 4.3% increase in quarterly revenue. Its leather goods and saddlery division advanced 10.8%, showing that demand for its most established products remains comparatively resilient.

China remains central to the downturn. A prolonged property slump and weaker financial markets have affected consumer confidence, while softer spending in the United States limits the ability of European brands to compensate elsewhere. Results also suggest that wealthy clients are behaving differently from aspirational customers, who are more exposed to economic uncertainty.

For the luxury industry, the challenge extends beyond restoring sales. Brands may need to review store expansion, improve productivity and focus more closely on relationships with established customers. Exclusivity and product desirability are becoming increasingly important, although relying heavily on a smaller group of wealthy buyers brings its own risks.

The final quarter will test whether new collections and seasonal demand can stabilise performance. Until stronger consumer confidence returns, investors are likely to judge luxury groups on resilience and financial discipline rather than promises of rapid growth.