Published by Global Banking & Finance Review®
Posted on July 23, 2025
3 min readLast updated: January 22, 2026
Add as preferred source on GoogleLuxury brands face sales declines due to US tariffs and shopper fatigue, impacting the $400 billion market. LVMH and Kering report significant drops.
By Mimosa Spencer
PARIS (Reuters) -LVMH and Kering are expected to report another drop in quarterly sales, deepening investor worries about a prolonged downturn in the $400 billion luxury market as brands face the threat of hefty U.S. import tariffs.
The results, kicking off with LVMH on Thursday, will likely show that any revival in demand for pricey fashion in the key U.S. and Chinese markets remains elusive.
Uncertainty unleashed by U.S. President Donald Trump's trade war has caused volatility in stock markets, weighing on consumer confidence.
Trump's threat of 30% tariffs on imported EU goods risks hurting luxury houses that make products in France and Italy. They will be wary of lifting prices for U.S. consumers after signs that previous rounds of price hikes slowed demand.
"The level of price increases has been too much" at a number of brands, alienating the "aspirational" middle-income shoppers, said Caroline Reyl, head of premium brands at Pictet Asset Management.
LVMH's fashion and leather goods division, home to Louis Vuitton and Dior, is expected to show sales down 6% year-on-year, its fourth consecutive quarterly decline, according to a Visible Alpha consensus forecast.
Gucci, Kering's main earner which is undergoing an overhaul, has struggled for twice as long and is seen reporting sales down nearly a quarter from a year earlier.
After two years of slowing sales, unease about the health of the industry is growing, with customers balking at higher price tags.
Shares of LVMH are down nearly 27% since the start of this year, while shares of Kering are down 15%. Shares of Hermes and Richemont, which cater to mostly wealthy clients, were little changed, with the former down 0.9% and the latter up 1.6% over the same period.
LVMH, Europe's most valuable listed company as recently as January, has slipped to fifth place.
"It seems that investors are starting to worry about the long-term structural attractiveness of the industry," UBS analysts said last week.
Sales of handbags - previously a growth engine - have been weak as shoppers opt for timeless, investment-grade jewellery.
Brands including Dior, Gucci and Chanel have recruited new designers, but it takes time for fresh styles to enter stores.
LOWER-PRICED PRODUCTS
Brands like Louis Vuitton and Prada are offering more products below $1,000, like a new hybrid ballerina-sneaker shoe, for example, and emphasising beauty products, said Bain consultants.
But that carries risks.
"The aspirational skew of the brand is unhelpful currently," said HSBC analysts, highlighting problems at Louis Vuitton. "Some inconsistencies, we feel, are likely starting to have consumers wonder."
Consensus forecasts peg organic sales of LVMH down 3%, while Kering is seen down 13%; Hermes and Prada are expected to show a 10% rise, as Prada's Miu Miu label takes market share from rivals.
Kering will report its results on July 29, while Hermes and Prada are due to report on July 30.
(Reporting by Mimosa Spencer; Editing by Jamie Freed)
LVMH is expected to report a 6% year-on-year sales decline, while Kering is projected to show a nearly 25% drop in sales.
Consumers are increasingly hesitant to purchase luxury items due to higher price tags, leading to a decline in sales for brands like LVMH and Kering.
The threat of 30% tariffs on imported EU goods could negatively affect luxury houses that produce items in France and Italy, complicating their pricing strategies.
Brands like Louis Vuitton and Prada are introducing more products priced below $1,000 and focusing on beauty products to appeal to a broader audience.
Analysts express concerns about the long-term structural attractiveness of the luxury industry, indicating that investor confidence is waning.
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