Luxury recovery? China demand lifts LVMH, Prada

Europe’s luxury titans are stirring back to life, as LVMH returns to quarterly growth and rival Kering shows early signs of a modest recovery in China. Despite most groups — excluding ultra-luxury houses Brunello Cucinelli and Hermès — posting sales declines for the first nine months of the year, this results season offers a glimmer of hope that the two-year global luxury slump may be coming to an end. Jing Daily takes a look at the latest earnings updates from leading luxury players. LVMH French luxury giant LVMH reported a 1% rise in sales for the third quarter ending September 30, returning to growth following two quarters of declines. In Asia excluding Japan, a region driven largely by mainland China, the industry bellwether saw “noticeable improvement” in the third quarter, with sales up 2% compared with a 6% slump in the second quarter. Mainland China “turned positive” in the third quarter, with local Chinese demand growing in the “mid-to-high single digits,” said LVMH CFO Cécile Cabanis in an earnings call. However, in the first nine months of the year, sales in Asia excluding Japan were down 6%. This means the Parisian company would need a near-miracle fourth quarter to end 2025 with positive sales — a feat few luxury houses are likely to achieve this year. Kering Kering reported a 10% dive in third-quarter sales to $3.9 billion (€3.4 billion), as flagship brand Gucci continued to struggle, especially in the Asia-Pacific region. In Asia Pacific, which includes Greater China, third-quarter sales fell 10%, though Kering CFO Armelle Pouloi noted that “trends in China improved markedly over the last quarter.” He added that while performance remained negative, the sequential decline had moderated. In the first nine months of the year, the group generated global revenue of $12.6 billion (€11 billion), down 14%. The firm’s recently appointed CEO, Luca de Meo, has already started focusing on the group’s key businesses, highlighted by the appointment of a new Gucci leader, Francesca Bellettini, in September and the sale of its beauty business to cosmetics giant L’Oreal this month. Brunello Cucinelli Across the continent, Italian luxury brand Brunello Cucinelli continued to defy the two-year industry slowdown, reporting an 11.8% increase in third-quarter sales thanks to growth in Asia. Unlike LVMH and Kering, the quiet luxury specialist posted strong revenue growth of 15.6% in the first nine months, with China delivering double-digit gains. The Italian brand called China a steadily evolving market, contributing about 13% of total revenue — a figure the company expects to rise organically over time, driven by the exclusivity and quality of its collections. Hermès Fellow super-luxury brand Hermès also clocked a strong quarter, joining Brunello Cucinelli in defying the industry downturn and recording notable growth in Greater China. In the third quarter, Hermès posted $4.4 billion (€3.9 billion) in sales, up 10% at constant exchange rates, with Asia excluding Japan rising 4%. Over the summer, the Parisian maison revamped its retail footprint, renovating its Four Seasons store in Macao in June and its Galleria mall location in Seoul in August to attract more high-net-worth clients. For the first nine months of the year, Hermès reported $13.7 billion (€11.9 billion) in consolidated revenue, up 9% at constant exchange rates. Prada Prada Group, which operates its namesake Prada brand alongside its sister brand Miu Miu, reported a 9% uptick in sales, totaling $4.6 billion (€4.07 billion) in the first nine months. The Italian fashion giant logged double-digit growth in Asia Pacific, up 10%, with mainland China witnessing “some improvement” during the third quarter. The company’s resilience positions it well for its recent acquisition of fellow Italian brand Versace, purchased in April from New York-based Capri Holdings for $1.4 billion (€1.25 billion). Last month, the EU approved the takeover, stating that the deal raised no competition concerns. Ferragamo On a weaker note, Florence-based Ferragamo reported third-quarter revenues of $254 million (€221 million), up 1.7% at constant exchange rates, as sluggish demand in the Asia-Pacific region continued to weigh. Quarterly sales in the region fell 10.5%, a modest improvement over the second quarter. However, the quarterly uptick was not enough to staunch broader declines, with Asia-Pacific sales down 14.7% for the first nine months due to weak consumer sentiment and low shopper traffic. Zegna At Zegna Group, third-quarter revenues inched forward just 0.2% YoY to $459 million (€398.2 million). The owner of Zegna, Thom Browne, and Tom Ford Fashion said the quarter was adversely impacted by the Greater China region, which, despite an improvement on last quarter, reported a 10% drop in sales during the three months. For the nine-month period, Greater China revenues plummeted 14.9% to $346 million (€300.5 million). Since the beginning of the year, the company has shuttered two Thom Browne stores and three Zegna stores in Greater China while opening one Tom Ford location — signaling that the Milan-based company is relying on the New York fashion brand, which it acquired in 2023, to boost sales in the market. The Jing Take While Chinese shoppers are not yet spending at pre-2022 levels, the luxury industry is gradually showing renewed strength. For global houses betting big on China’s long-term potential, figures from this most recent quarter offer some reassurance: the market’s reset may finally be giving way to recovery. However, the true test will come in the fourth quarter. Will luxury fashion groups continue this momentum through the busy holiday season, including China’s Singles’ Day? And will it be enough to help recovering French groups like LVMH and Kering achieve positive sales growth for the full year? On verra. Note: All percentage changes compare year-over-year performance unless stated otherwise.

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Luxury recovery? China demand lifts LVMH, Prada