Luxury Groups: LVMH, Kering, Hermès, Richemont, Prada — 2026-10-25
European luxury giants faced a severe valuation reset this week, with shares trading at decade lows after disappointing Q3 results from Kering and Hermès. The sector is grappling with a deepening slump in China, where even historically resilient brands like Cartier are seeing double-digit sales declines, while Kering’s stock plunged over 11% amid Gucci’s continued turnaround struggles.
Luxury Groups: LVMH, Kering, Hermès, Richemont, Prada — 2026-10-25
Top developments
Kering Shares Plunge as Gucci Turnaround Stalls
Kering’s stock dropped approximately 11-12% following the announcement of Q3 results that showed Gucci sales falling by 6%, missing analyst expectations. The decline was driven primarily by weak demand in China, which remains a major headwind for the group. Despite the poor performance, Kering maintained its strategic direction, though the market's reaction highlights growing skepticism about the brand's ability to recover its previous momentum.
Hermès and Cartier Hit by Deepening China Slump
Even the most resilient luxury houses are not immune to China’s economic slowdown; Hermès and Cartier reported steeper-than-expected sales declines in mainland China, with some figures falling into double digits in recent months. Hermès’ Q3 revenue grew by only 4.3%, a slowdown that disappointed investors who had viewed the brand as a safe haven. The retreat of wealthy Chinese consumers, driven by economic uncertainty and new tax liabilities, is forcing a broader reassessment of growth forecasts for 2027.
LVMH Reports Modest Growth Amid Sector-Wide Pressure
LVMH reported Q3 revenue of €18.504 billion, representing a 1% organic growth rate, which failed to meet higher growth forecasts despite the group’s overall stability. The Fashion & Leather Goods division, the group's largest, saw a 5% organic decline, signaling that the core luxury market is still struggling to recover. LVMH’s shares slipped 2.1% as the broader luxury sector braced for a difficult winter.
Valuations Hit Decade Lows as €250bn in Value Evaporates
The collective market capitalization of Europe’s luxury groups has fallen by €250 billion as Chinese consumer demand fades and global stock markets cool. Bloomberg reports that shares in major firms like LVMH and Hermès are now trading at their cheapest levels in more than a decade, reflecting deep investor pessimism about the end of the industry slump. This valuation compression is exacerbating the downturn, as analysts question whether the "recovery" narrative holds up against persistent regional weaknesses.
Prada and Zegna Show Resilience with Stronger Growth
In contrast to the French giants, Italian luxury houses Prada and Zegna demonstrated stronger performance in Q3. Zegna reported revenue growth of 8.2% to 9%, driven by strong demand in the USA and a modest recovery in China. Prada also outperformed peers, with first-half revenues reaching €4.5 billion, up 4%, as the brand benefited from a more balanced geographic exposure.
Local view
French media outlets such as BFMTV and Les Echos are focusing heavily on the narrative that luxury brands "went too far" with price hikes, alienating Chinese consumers rather than just facing a cyclical downturn. Il Sole 24 ORE highlights the divergence within the Italian sector, noting that while Brunello Cucinelli’s stock is down 15% year-to-date, its sales are up 13%, suggesting a disconnect between market sentiment and operational reality.
Context & numbers
- LVMH Q3 Revenue: €18,504 million (+1% organic).
- Hermès Q3 Revenue Growth: +4.3%.
- Gucci Q3 Sales: -6%.
- Zegna Q3 Revenue Growth: +8.2% to +9%.
- Global Luxury Market Value: €1,443 billion in 2025, with 2026 expected to stabilize.
- China Spending: Domestic spending accounted for 65% of Chinese luxury spending in 2025, reversing the overseas rebound trend.
On the radar
- Store Network Restructuring: Prada and Kering are actively shrinking their store networks and investing in fewer, larger flagship locations to optimize efficiency amid rising costs and unrest in France.
- France Unrest Impact: Violent riots in France have damaged luxury boutiques, with reports of over 3,000 shops affected, contributing to stock declines and rising borrowing costs for European luxury firms.
- 2027 Outlook: Executives at major brands are privately expressing fears that the China slump could persist well into 2027, complicating long-term growth strategies.
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