Chinese shoppers are spending less on luxury. The world’s biggest fashion houses are feeling the pinch

Top European luxury groups have shed about €250 billion (US$280.26 billion; S$358.10 billion) of market value this year as spending by Chinese consumers wilts and AI-driven stock market wobbles depress demand for high-end shoes and handbags.

Results from LVMH, Hermes and Gucci owner Kering this month all missed market expectations that had already been cut significantly, confirming fears that the luxury industry remains in the grip of a multiyear downturn.

Europe’s six largest listed luxury companies — which also include Richemont, Prada and Moncler — have collectively lost €251 billion of market value this year. The declines have been steepest at LVMH and Hermes, the two largest luxury groups, whose market capitalisations have shrunk by €131.6 billion and €93.3 billion respectively.

Demand from shoppers in China was the industry’s motor of growth for over a decade but a prolonged property slump and weak stock market performance have undermined domestic demand over the past few years. Monthly retail sales growth in the world’s second-largest economy has averaged less than 0.5 per cent over the past six months, a sharp slowdown on the previous year.

“The Chinese luxury consumer recovery that the industry was hoping for has taken a pause . . . causing a setback in results, downward pressure on share prices and a lot of soul searching,” said Bernstein analyst Luca Solca.

LVMH, Kering and Hermes all flagged a marked deterioration in China in the third quarter at their results this month. Sales at LVMH’s bellwether fashion and leather goods division fell by a mid-teens percentage among Chinese clients globally, chief financial officer Cecile Cabanis said.

“The deceleration [in fashion and leather demand] is obviously largely driven by the Chinese clientele,” said Cabanis. “We hope it will subside. We are not sure when.”

The picture at Kering, which also owns Saint Laurent and Bottega Veneta, is worse still. Sales to Chinese consumers fell by between 15 and 20 per cent across the group in the third quarter, an acceleration from the mid-teens declines Kering reported in the preceding quarter.

The China chill has even begun to bite at Hermes, one of the most resilient luxury houses. Overall sales at the group’s ready-to-wear and accessories division fell 2 per cent globally, with chief financial officer Eric du Halgouet noting that a recent drop in the Chinese stock market, combined with a crackdown on offshore wealth, had made things tougher.

This week a policy came into force that will see Chinese authorities begin collecting a 20 per cent tax on dividends and interest earned from offshore trusts. Meanwhile the CSI 300 index, which tracks China’s 300 largest listed companies, has fallen 19 per cent over the past four months, a loss of more than US$2 trillion (S$2.56 trillion) in value, amid fears over weak domestic consumption and an AI bubble.

Nick Anderson, an analyst at Berenberg, said last week’s update from Hermes left him with “more questions than answers”.

“We fear that overexposure to China and a greater exposure to a more aspirational consumer than we previously thought will continue to weigh on Hermes’ revenues,” he added.

It wasn’t all bad news for luxury companies over the past few months. Sales of Birkins and other top-end bags at Hermes grew by 10.8 per cent, while jewellery brands including LVMH’s Tiffany and Kering’s Boucheron were in high demand, with both growing sales by double-digit percentages in the quarter.

But even demand in the US, which had been sustaining the industry earlier this year, has tempered in recent months as stock markets have cooled and gas prices have surged. Credit card data from Citi recorded luxury spending declines of at least 4 per cent in July, August and September.

Some labels have felt the slowdown more acutely than others. At one end is Hermes, which said its American shoppers were still spending at similar levels, and at the other is Kering, which is more exposed to aspirational middle-class shoppers. The Paris-listed group called out greater pressure on US consumers ahead of November’s midterm elections.

With little sign of an upturn in luxury’s most important markets, Bernstein’s Solca said that most luxury companies have “nothing better to do” than try to become more efficient as they wait for shoppers to return.

Adrienne Klasa © 2026 The Financial Times.

This article originally appeared in The Financial Times.