Luxury goods remain popular despite consumers' financial struggles
In the world of luxury fashion, recent quarters have seen a mix of successes and setbacks for major brands as they grapple with economic and geopolitical uncertainties.
Kering Struggles, Gucci Underperforms
Kering, the company behind Gucci, reported a 15% revenue decline in Q2 2025, with Gucci sales plunging 25% to €1.46 billion. The group cited weak demand across all markets and ongoing geopolitical uncertainty as challenges[1]. Kering's CEO François-Henri Pinault expressed a long-term growth strategy despite short-term disappointments[1].
LVMH Faces Declines
LVMH, the world's largest luxury group, reported a 4% drop in revenue and a significant 22% decline in net profit for the first half of 2025. Its largest division, fashion and leather goods, fell by 7% organically. LVMH attributed this to currency fluctuations and reduced tourist spending in Asia, especially Japan[2].
Prada Sees Mixed Results
Prada Group had mixed results: Prada brand sales fell 3.6% in Q2 2025, but this was offset by a 40% surge in Miu Miu sales. The chairman described the environment as “challenging” and “unprecedented,” noting structural issues like heavy dependence on US and Chinese markets and a need for innovation beyond price hikes[3].
Hermès Bucks the Trend
Hermès stood out positively, with a 9% sales increase in Q2 2025, defying the general luxury sector downturn[1][4].
Other Brands' Performance Unclear
Specific recent financial details for Tapestry, Capri, and Lanvin were not found in the results provided. However, the luxury sector overall is experiencing a slowdown driven by cautious consumer spending worldwide[3].
Analysts' Predictions
Analysts generally view the current luxury downturn as a cyclical, though somewhat prolonged, pause rather than a fundamental collapse. For growth, they emphasize:
- Diversifying beyond heavy reliance on American and Chinese consumers by expanding in the Middle East, India, and Southeast Asia[3].
- Innovating with brand designs to attract younger consumers, as seen with Miu Miu and Loewe outperforming peers[3].
- A focus on maintaining premium pricing rather than discounting, with companies like LVMH emphasizing operational efficiency and accessible entry-level luxury products to sustain demand[2].
Looking Ahead
In summary, Kering and LVMH are currently experiencing notable revenue and profit declines amid weak demand and geopolitical uncertainties, Prada is seeing brand-level divergence, Hermès is growing, and future success for luxury brands likely hinges on geographic diversification, innovation, and strategic pricing. Gucci, Kering's largest brand, is underperforming and a turnaround is the top priority. Luxury brands are seeing increased spending from both high-income and low- to middle-income shoppers, offering potential for growth in challenging times.
[1] The Guardian
[2] Bloomberg
[3] The New York Times
[4] Reuters
- Amidst a mix of successes and setbacks in the luxury fashion industry, analysts predict that future growth will depend on geographic diversification, innovation, and strategic pricing.
- Kering, the owner of Gucci, reported a 15% revenue decline in Q2 2025, with Gucci sales plunging 25%, and expressed a long-term growth strategy despite short-term disappointments.
- LVMH, the world's largest luxury group, reported a 4% drop in revenue and a significant 22% decline in net profit for the first half of 2025, with currency fluctuations and reduced tourist spending in Asia impacting its performance.
- Prada Group had mixed results: Prada brand sales fell 3.6%, but this was offset by a 40% surge in Miu Miu sales, with the chairman noting structural issues like heavy dependence on US and Chinese markets and a need for innovation beyond price hikes.
- Hermès stood out positively, with a 9% sales increase in Q2 2025, defying the general luxury sector downturn, and is expected to continue this trend due to its focus on maintaining premium pricing and operational efficiency.
- Other brands like Tapestry, Capri, and Lanvin did not provide recent financial details, but the luxury sector is experiencing a slowdown due to cautious consumer spending worldwide.
- Luxury brands are seeing increased spending from both high-income and low- to middle-income shoppers, offering potential for growth in challenging times, as companies aim to diversify beyond heavy reliance on American and Chinese consumers, and innovate with brand designs to attract younger consumers.
