Luxury Groups: LVMH, Kering, Hermès, Richemont, Prada — 2026-10-27

Top developments

Kering’s Gucci Stalls as China Adjustment Extends

Kering reported a 1% comparable revenue decline in Q3, with its core brand Gucci seeing direct-operated retail sales fall 9%. The group extended its China market adjustment period to two years, signaling that the turnaround for the flagship brand is faltering amid a prolonged downturn in Chinese consumer spending. Kering shares dropped significantly, reflecting investor concern over the brand's inability to regain momentum.

Hermès Misses Expectations Amid Chinese Retreat

Hermès reported third-quarter sales slightly below forecasts, driven by weakness in the Ready-to-Wear and Accessories divisions in China. While leather goods remained a bright spot, the "challenging" economic backdrop in China and the Middle East pressured the brand’s historically resilient performance. Sales at Hermès and Cartier in mainland China fell as much as double-digits in August and September, indicating that even the most loyal wealthy consumers are pulling back.

Prada and Zegna Outperform with Organic Growth

In contrast to the French giants, Italian luxury houses Prada and Zegna reported strong organic growth. Prada achieved 4% organic revenue growth in the first nine months of 2026, reaching €4.5 billion in revenues. Zegna also accelerated, with Il Sole 24 ORE noting that smaller, agile Italian players are outperforming the broader European sector.

LVMH Sees Modest Growth Amid Sector-Wide Valuation Lows

LVMH reported modest organic revenue growth of 1% in Q3 2026 and 2% for the first nine months. Despite this, the group’s shares, along with those of Kering and Hermès, are trading at their lowest valuations in a decade. The market is pricing in a prolonged slump, with LVMH, Hermès, and Kering shares down up to 40% since January.

Local view

French media outlets like Nextplz and BFMTV highlight that luxury brands "went too far" with price hikes, alienating Chinese consumers who are now retreating from the market. Local analysts argue that the pricing strategy, intended to protect exclusivity, has backfired as purchasing power weakens. In Italy, Il Sole 24 ORE notes that while French houses tremble, Italian brands like Moncler and Brunello Cucinelli are holding up better, with Cucinelli’s sales rising 13% despite a 15% drop in its share price.

Context & numbers

• Market Cap Loss: Europe’s six largest luxury groups (LVMH, Kering, Hermès, Richemont, Prada, Moncler) have lost a combined €251 billion in market capitalization in 2026.
• China Sales: Sales for brands like Hermès and Cartier in mainland China fell double-digits in August and September 2026.
• Prada Revenue: Prada Group reported €4.5 billion in revenues for the first nine months, up 4% organically.
• Kering Revenue: Kering’s Q3 revenue was €3.345 billion, down 1% on a comparable basis.
• Bain & Company Forecast: The personal luxury goods market is expected to grow 2-4% in 2026, reaching €365-373 billion, but this relies heavily on a stabilization in China.

On the radar

• Q4 Guidance: Investors are awaiting further guidance from LVMH and Kering on whether the "two-year adjustment period" in China will extend into 2027.
• Geopolitical Impact: Continued monitoring of Middle East instability, which LVMH noted impacted Q2 growth.
• Korea’s Resilience: South Korea is emerging as a key sustaining market for premium luxury, offsetting some Chinese weakness.