Finance
Luxury groups pin hopes on US as China weakness persists
Published by Global Banking & Finance Review®
Posted on January 15, 2025
4 min readLast updated: January 27, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on January 15, 2025
4 min readLast updated: January 27, 2026
Luxury brands are focusing on the US market as China's economy weakens, impacting global sales. Companies like LVMH and Kering are adapting strategies to maintain growth.
PARIS (Reuters) - Global luxury goods companies are expected to pull out all the stops this year to persuade U.S. shoppers to splash out on diamond bracelets, quilted leather handbags and other designer fashions, given forecasts for more market weakness in China.
Retail executives are looking to tap into wealth in the United States linked to the strong stock market and rise in cryptocurrencies, while potential tariffs from U.S. President-elect Donald Trump could support the dollar, raising Americans' purchasing power for European luxury goods.
U.S. credit card spending on luxury brands in December improved, turning positive for the first time in more than two years, rising 1% year-on-year, based on data from Citi, thanks to better sales of leather goods and clothing.
The luxury goods companies, including LVMH and Kering, are hoping U.S. shoppers will come to the rescue after relying on brisk business from Chinese buyers for decades.
The 363 billion euro ($373.16 billion) global luxury goods market is wrestling with its lowest sales rates in years. China's property crisis and sluggish economy are weighing heavily on appetite for designer clothing and handbags, while shoppers in Europe, faced with rising living costs, have also held back on splashy purchases.
The industry has had a rollercoaster stock market ride since the post-pandemic spending spree began to fade more than a year ago, prompting a number of downward adjustments to forecasts heading into the end of last year. LVMH has lost more than 30 billion euros in its market cap over the past six months.
Last year was likely to have been one of the sector's weakest on record, with sales down 2%, based on previous estimates from consultancy Bain & Company.
VOLATILITY
Cartier-owner Richemont's end-of-year sales report on Thursday will give the first insight into the health of high-end demand, as its watch business has greater exposure to Chinese consumers than many other luxury groups.
Rival LVMH, owner of powerhouse brands Louis Vuitton and Dior, kicks off the earnings season for the sector on Jan. 28, setting expectations for the coming months with a trading update on the crucial, end-of-year holiday period.
Initial signs for the final quarter suggest business was still difficult in China, while some signs of improvement emerged in the U.S. market, with analysts expecting overall volatility in sales to remain.
Barclays analysts, following a trip to China in December, are projecting a more moderate decline in fourth-quarter sales than in the previous quarter, citing support for the market from promotions from shopping malls and government stimulus efforts.
But they underlined a lack of "meaningful and sustainable demand recovery" in China, noting even the wealthiest are cutting spending.
"Trading down is here to stay," in China, the Barclays analysts said, flagging a rise in popularity of premium brands like Laopu Gold, Arc'teryx and Coach which have more modest price tags.
LVMH is expected to report a 1% decline in fourth-quarter sales, based on a consensus forecast cited by UBS, with a 3% drop at its all-important fashion and leather goods division.
Birkin bag maker Hermes, which caters to the very wealthy, is forecast to post a 10% sales rise, while Kering, working to turn around star label Gucci, is seen posting a 12% decline in sales, highlighting a widening gap between stronger and weaker players.
Richemont, which mostly sells jewellery and watches, is expected to report a 1% rise in sales over the last three months of the year, while Burberry, which is also going through a brand overhaul, is seen down 13%, according to UBS.
The sector overall is expected to grow around 4% in 2025, with sales to Americans accounting for over a third of the global growth, up 7%, compared with a 1% decline from the Chinese, based on UBS estimates.
“Typically after difficult periods for the luxury industry, you have big winners and big laggards,” said Caroline Reyl, head of premium brands at Pictet Asset Management.
“Not everybody is going to win.”
After LVMH opens earnings season at the end of January, Kering follows on Feb. 11 and Hermes on Feb. 14. Richemont and Burberry report sales for the last three months of the year on Jan. 16 and 24, respectively.
($1 = 0.9728 euros)
(Reporting by Mimosa Spencer; Editing by Jane Merriman)
Luxury goods companies are looking to U.S. shoppers to boost sales, especially as they face challenges in China. They are tapping into the wealth linked to the strong stock market and rising cryptocurrencies.
In December, U.S. credit card spending on luxury brands improved, rising 1% year-on-year for the first time in over two years, driven by better sales of high-end products.
China's property crisis and sluggish economy are significantly weighing on the appetite for luxury goods, leading to a lack of meaningful demand recovery even among the wealthiest consumers.
Analysts expect overall volatility in sales, with LVMH projected to report a 1% decline in fourth-quarter sales, while Hermes is forecasted to see a 10% sales rise.
The luxury sector is expected to grow around 4% by 2025, with sales to Americans accounting for over a third of the global growth, contrasting with a projected 1% decline from the Chinese market.
Explore more articles in the Finance category
