China H1 2026: Prada sees improvement, slowest market for Hermès

Earnings results from the first half of 2026 point to a luxury market in China that has stopped falling without yet turning up. Demand is stabilizing; it is not rebounding. LVMH, reporting on July 27, and Prada, on July 30, both pointed to improving momentum across Asia-Pacific. Kering, on July 28, returned to group growth but said Mainland China remained challenging. Hermès, on July 29 — the sector’s strongest performer globally — recorded its slowest growth in the very region Greater China dominates. The resilience was concentrated in a few categories, and the earnings put numbers on it. Jewelry was the clearest winner: Kering’s jewelry houses — Boucheron, Dodo, Pomellato and Qeelin — grew 20% on a comparable basis over the half, while LVMH’s watches and jewelry division rose 9% organically, accelerating to 11% in the second quarter. Leather goods held firm at Hermès, up almost 10% at constant rates. Footwear was the quieter performer, with Jimmy Choo up 10.5% against a 7.6% decline at Michael Kors. Beauty and fragrance, often the entry point into luxury for younger shoppers, did not follow. LVMH’s perfumes and cosmetics division was flat over the half and slipped 1% in the second quarter, while Hermès’ perfume and beauty métier fell 4.5%. The split is less about scale than about newness. The groups whose China business improved this half — LVMH, and Prada with Miu Miu — had fresh creative direction and new product cycles landing in the market. Gucci, midway through its own reset, saw collections gain traction while China stayed difficult. Hermès has the desirability without the volume: its Chinese business grew, but barely. Kering: China stabilizes, slowly Kering returned to growth in the first half, with revenue of 7.22 billion euros ($8.34 billion) up 1% on a comparable basis and second-quarter revenue of 3.65 billion euros ($4.22 billion) up 2%. Gucci, the group’s largest house at close to 40% of revenue, remains the swing factor. Its first-half revenue of 2.76 billion euros (US$3.18 billion) was down 5% on a comparable basis, but the second-quarter decline narrowed to 2%, and sales in its own stores improved seven percentage points on the first quarter as new collections — including the “Borsetto” and “Paparazzo” lines — gained traction. China is where that improvement runs out. North America was the group’s main growth driver; Kering said Western Europe and Asia-Pacific showed early signs of recovery, but that Mainland China “remained challenging,” even as trends improved through the quarter. Kering’s jewelry division, which includes Boucheron, Dodo, Pomellato and Qeelin, continued to demonstrate the category’s strong momentum, with sales increasing 18%. The group is investing into that weakness rather than retreating from it. In April, Kering took a minority stake in Chinese group ICCF and formed a partnership around its flagship brand Icicle, giving it a direct position in the domestic market it has struggled to sell into. It also completed 84 net store closures over the half, part of a 100-store reduction planned for the year. LVMH: momentum broadens across Asia LVMH gave the clearest signal of the season that Chinese demand is moving past stabilization. Revenue for the first half was 38.6 billion euros ($44.58 billion), down 3% as reported but up 2% organically, with growth accelerating to 3% organically in the second quarter. Asia excluding Japan delivered strong growth, the group said, confirming a trend it first noted in the second half of 2025. The caveat is that LVMH does not break out China — or any region — by growth rate. The read on Chinese demand comes from what its houses reported, not from a regional line. On that basis it is a good one. Fashion and leather goods, which accounts for nearly half of group revenue, returned to 1% organic growth in the second quarter, ending a prolonged decline. Chairman and chief executive Bernard Arnault attributed the acceleration to “the success of Jonathan Anderson’s first designs for Christian Dior” and “the remarkable performance of Louis Vuitton’s exceptional new stores in Beijing and Seoul” — the Beijing flagship being the group’s most direct China datapoint of the half. Watches and jewelry was the standout division, up 9% organically over the half and accelerating to 11% in the second quarter, with Tiffany & Co. and Bvlgari both posting strong growth. In wines and spirits, Hennessy said the momentum that began at Chinese New Year continued through the half — a meaningful signal given cognac’s exposure to Chinese consumption. Profitability held. Recurring operating profit of 8.7 billion euros ($10.04 billion) was down 4%, but the operating margin stayed at 22.5%. One move cut against the tone. During the half, DFS sold its Greater China businesses to China Tourism Group Duty Free — a retrenchment from the mainland even as the group’s houses reported improving demand there. Hermès: the outperformer still waiting on China Hermès again outgrew the sector, and again found China its slowest market. First-half revenue reached 8.16 billion euros ($9.43 billion), up 6% at constant exchange rates — though only 1.6% as reported, after a currency drag of more than 360 million euros ($416 million). Growth accelerated from 6% in the first quarter to 7% in the second. Recurring operating income of 3.35 billion euros ($3.87 billion) held the margin at 41%. Asia-Pacific excluding Japan — the region Greater China dominates — grew just 2.4% at constant rates over the half and 2.5% in the second quarter, making it the slowest-growing of Hermès’ growth regions. Every other major region ran well ahead: the Americas up 15.3%, Japan 11%, Europe excluding France 8.8%. Only the Middle East, down 4.2%, declined. Hermès said growth in the region continued “notably in Greater China,” and singled out South Korea for an “outstanding performance.” Leather goods and saddlery, the largest métier at close to half of revenue, grew 9.8% at constant rates. Perfume and beauty was the sole decliner, down 4.5%. The house is building in China regardless. It opened a new Sanlitun store in Beijing in early April, reopened its Hong Kong Elements and Taipei Sogo Fuxing locations after renovation and expansion, and staged its Hermès in the Making exhibition in Shanghai in May. Prada Group: China improves, Versace complicates the numbers Prada Group’s first-half net revenue reached 3.05 billion euros ($3.52 billion), up 11% at current exchange rates, 16% at constant rates and 5% organically. The spread is Versace, which Prada acquired from Capri Holdings in December and which contributed 305 million euros ($352 million) over the half. Organic growth, which strips Versace out, accelerated to 7% in the second quarter. Asia-Pacific remains the group’s largest market by revenue at 922 million euros ($1.06 billion), up 15% at constant rates and 6% organically. Prada reports the region as a whole and does not break out Greater China. The Americas grew fastest, up 37% (17% organic) to 572 million euros ($661 million), while the Middle East fell 24%. The Prada brand drove the acceleration, with retail sales up 3.3% at constant rates over the half and 6.3% in the second quarter. Miu Miu grew 2.5% over the half and 2.6% in the second — modest in isolation, but against a 40% surge in the same quarter last year. Versace’s 305 million euros was in line with expectations, the group said, as it prioritizes quality of sales ahead of Pieter Mulier’s debut collection. Chief executive Andrea Guerra said the group closed the half “with solid results, supported by a second quarter that gathered pace after a strong start to the year,” adding that Miu Miu “has confirmed its relevance and desirability … despite a still demanding year-on-year comparison.” Executive chairman Patrizio Bertelli noted the group had now recorded “22 consecutive quarters of organic growth.” Margin is where Versace shows. Adjusted EBIT of 530 million euros ($612 million) gave a margin of 17.4%, down from 22.6% a year earlier — a decline the group attributed to the Versace consolidation and currency effects. On an organic basis, it said, the margin was stable. Capri: Asia holds up as its two brands diverge Capri Holdings is the only US-listed group here and the only one on a different fiscal calendar. It reported first-quarter fiscal 2027 results on August 5, covering the quarter ended June 27 — effectively the same three months as its European peers’ second quarter. Group revenue fell 3.5% to $769 million, or 4.1% at constant currency. Michael Kors drove the decline, with revenue down 7.6% at constant currency to $590 million, a 15th consecutive quarterly fall. Jimmy Choo went the other way, up 10.5% as reported and 9.3% at constant currency to $179 million. Operating margin was 2.2%, or 3.6% adjusted. Asia was not the problem. Regional revenue rose 4.5% to $115 million, with Michael Kors Asia up 5.6% and Jimmy Choo Asia up 2.6% — one of the group’s firmer markets rather than a drag. Capri does not disclose China separately, so its results support no direct read on Chinese demand. Chairman and chief executive John D. Idol said strategic initiatives across both brands were “driving deeper consumer engagement through enhanced brand storytelling and compelling product innovation.” Revenue, operating income and earnings per share all beat expectations, but Capri cut full-year guidance to about $3.4 billion from $3.53 billion. It attributed the reduction to three factors, none of them China: roughly $50 million from Michael Kors inventory delays, $50 million from softer trading in EMEA tied to the Middle East conflict, and $35 million from currency.

China H1 2026: Prada sees improvement, slowest market for Hermès

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China H1 2026: Prada sees improvement, slowest market for Hermès

How Bottega Veneta weaved China’s forever it bag