Markets · · 2 min read
Editor: Bohdan S.
Luxury giants lose €250bn in market value as China’s rich spend less
Europe's biggest luxury houses have shed about €250bn in value, the FT reported, after a run of soft results showed wealthy Chinese buyers are still holding back.
The short answer
The Financial Times (FT) reported that European luxury groups have lost roughly €250bn in market value as Chinese demand weakens and stock markets cool. Recent results from Hermès, LVMH and Kering pointed the same way: sales in China are soft, and Kering, LVMH and Hermès shares are each down about 40% this year.
What happened
The Financial Times (FT) reported that the combined value of Europe's luxury groups has dropped by about €250bn, with a China slowdown and cooler global stock markets deepening the sector's slump. Recent results back up that picture. Hermès said on October 22 that third-quarter sales rose 4% at constant exchange rates, its slowest pace since 2020, and Greater China was flat. LVMH said on October 12 that its fashion and leather goods unit shrank 5% organically as China weakened. On October 23, Kering stock fell 16% in Paris, Hermès hit a four-year low, and LVMH slipped 1.5%, Korean outlets reported, citing Reuters and Bloomberg.
What it means
For years, Chinese shoppers were the engine of the luxury trade. That engine has stalled. China's statistics bureau said retail sales grew just 1.1% in September from a year earlier, and sales of gold and jewelry fell 9.6%. Real estate development investment dropped 20.6% over the first nine months, and new home sales by value fell 13.9%, figures cited by the Seoul Economic Daily show.
The companies have offered their own explanations. LVMH finance chief Cécile Cabanis said tougher taxes on overseas trust assets held by wealthy Chinese had hurt their mood. Hermès cited the property slump, weak consumer confidence and a strong habit of saving. LVMH also faced a backlash in China after Louis Vuitton took a local tea brand to court over a trademark, according to the Seoul Economic Daily.
What makes this week stand out is that even Hermès, long seen as almost immune to downturns, is feeling it. Its leather goods arm, which makes the Birkin and Kelly bags, grew 10.8% in the quarter. But ready-to-wear and accessories fell 2% and watches dropped 6%, according to a Yahoo Finance analysis. In short, the scarcest products still sell, while the more everyday luxury items are struggling. Berenberg cut its rating on Hermès to hold from buy.
China is not the only problem. Higher oil prices tied to the war in the Middle East are adding to inflation worries, and protests have disrupted stores around Place Vendôme in Paris and in Milan. Bloomberg Intelligence analyst Deborah Aitken said planned protest marches threaten both store operations and tourism. Deutsche Bank said the latest numbers could lead to more cuts to profit forecasts for the second half and next year.
The bull case
The sell-off has made luxury shares much cheaper. LVMH trades at roughly 16 times expected earnings, its lowest in over a decade, and Hermès at about 27 times versus a post-pandemic peak near 70. Demand in the US, Europe and Japan remains healthy, and Hermès still grew leather goods by double digits. If Chinese spending stabilizes, today's low valuations could leave room for a rebound.
The bear case
The slowdown is now in its third year and keeps spreading. Kering is closing stores, LVMH's core fashion arm is shrinking, and Hermès just posted its weakest growth since 2020. Deutsche Bank warned that earnings forecasts may fall further. Meanwhile, protests in Europe, inflation linked to oil and softer tourism add new risks, so cheaper shares could still get cheaper if China does not recover.
Why it matters
For investors
Luxury stocks such as LVMH, Hermès and Kering are the most exposed, with Deutsche Bank flagging possible further forecast cuts. Chinese retail and property data may matter more than usual for the sector's next move.
The wider context
Funds that hold big European consumer brands could feel a drawn-out luxury slump. The story also shows how much spending by one country's wealthy shoppers can shape the profits of global companies.
Market impact
| Asset (ticker) | Possible move | Timeframe | Why |
|---|---|---|---|
| LVMH (MC) | ↓ Down | Short term | Fashion and leather goods shrank 5% in the third quarter as Chinese demand weakened. |
| Hermès (RMS) | ↓ Down | Short term | Slowest growth since 2020 and a broker downgrade pushed shares to a four-year low. |
| Kering (KER) | ↓ Down | Short term | Gucci weakness and store closures triggered a 16% one-day share drop. |
The FinPrism newsroom's view of how these figures could move, as of . It is general news commentary, not a recommendation to buy, sell or hold anything.
Frequently asked questions
Why are luxury stocks falling in 2026?
Wealthy Chinese shoppers are spending less amid a property slump, tighter tax enforcement and weak confidence. Results from LVMH, Hermès and Kering all showed soft demand in China, and the FT reported that the sector has lost about €250bn in value. Oil-driven inflation and protests in Europe add pressure.
How did Hermès do in the third quarter of 2026?
Hermès said third-quarter sales reached €4.1bn, up 4% at constant exchange rates, its slowest growth since 2020. Leather goods grew strongly, but ready-to-wear and watches declined and Greater China was flat. The shares fell and later hit a four-year low.
Why does China matter so much to luxury brands?
Chinese consumers have long been a key growth driver for European luxury houses. When they cut back, as they are now, it shows up quickly in results. LVMH said its fashion and leather goods unit shrank in the third quarter because of slower demand in China.
Sources: Financial Times, Hermès International (via MarketScreener), LVMH (via Stock Titan), Seoul Economic Daily, The Asia Business Daily, Yahoo Finance
How this was made: written with AI assistance from the sources listed above, following our editorial standards.
