Luxury Seeks a Return to Growth in 2026
Luxury Seeks a Return to Growth in 2026
After a marked slowdown over the past two to three years, driven by price hikes, weaker creative momentum, and China’s slowdown, the luxury sector is hoping to navigate geopolitical instability and return to growth in 2026.
The global leader, LVMH, will be watched especially closely as it kicks off the earnings season this Monday, April 13, after markets close, with the release of its sales figures for the first three months of the year.
The sector, which had reached post-COVID-19 highs, went through a real ordeal in 2024 and 2025. While not all groups were affected equally, consumers were broadly less receptive than before to price increases and certain stylistic choices. “The post-COVID effect led to a considerable increase in activity, purchases, and revenues, driven by the return of customers and a kind of ‘revenge spending,” notes Christophe Caïs, head of luxury specialist firm CXG. “But there were very significant price increases that discouraged aspirational customers”, occasional clients drawn to luxury but without the purchasing power of ultra-high-income buyers, he adds.
In a recent report, HSBC refers to “self-inflicted wounds” by companies, namely a “lack of creativity” and price increases that outpaced cost inflation.
Another factor behind the downturn was the slowdown in the Chinese market, a major growth engine in recent years. Since late February, the war in the Middle East has added further pressure on the sector. According to a study by Bernstein analysts, the region accounts for around 6% of the industry’s sales, but the impact remains difficult to assess, as it will depend on how long the conflict lasts.
New arrivals
In 2025, French giant LVMH posted net profit down 13% to €10.9 billion, with sales falling 5% to nearly €81 billion. Its compatriot Kering saw annual sales drop 13% to €14.7 billion, while net profit fell by more than 90%, mainly due to difficulties at its flagship brand, Gucci. Across the Channel, British group Burberry slipped into the red for its 2024–2025 financial year. The brand, famous for its tartan, then announced cost-cutting measures affecting 1,700 jobs.
But luxury houses have responded, specialists argue, notably by reshuffling designers. The year 2025 “saw three times more creative director changes than previous years (…), a clear and emphatic sign of a luxury sector in search of new codes,” notes a recent report by strategy consulting firm Kearney. Matthieu Blazy joined Chanel, Jonathan Anderson arrived at Dior Men within the LVMH group, and Demna Gvasalia moved to Gucci. “2026 will therefore be a year full of hope on this front, and the impact of these newcomers will undoubtedly be scrutinized very closely,” Kearney adds.
Leadership teams have also changed. The most striking example is Luca de Meo, former Renault chief executive, who was brought in last year as Kering’s CEO to steady the company. The year before, Joshua Schulman, former head of the American brands Michael Kors and Coach, had taken over at Burberry.
The houses have also adapted their offer. “One approach has been to create smaller products so that prices can once again match the expectations of aspirational clients,” says Christophe Caïs. Another industry analyst adds: “For two or three years, there was a sense there was no reason to go into luxury boutiques, they had become too expensive and too boring. Now it is less expensive and more interesting. So people are starting to walk through the door again.”
Originally Published in French in Stratégies and La Tribune.
