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Just a few years ago, it seemed like sales for the luxury goods makers behind brands like Louis Vuitton to Tiffany’s and Gucci were soaring.
The annual revenue of LVMH, which owns two of those three companies, has soared to about 86.2 billion euros ($94 billion) in 2023, nearly eight times more than in 2000, thanks to trends that include newly wealthy Chinese consumers buying handbags and watches, and social media influencers preaching the virtues of building personal brands.
The company’s market value surpassed a record $500 billion in April 2023, making CEO Bernard Arnault the richest man in the world at the time. Sales and profits at Kering’s high-fashion brands, including Gucci, Balenciaga and Bottega Veneta, and other major luxury players such as Hermès and Richemont, experienced similarly dizzying growth.
Then the escalator not only stalled but also began to slide downward amid growing geopolitical turmoil, slowing growth in China, US tariffs that raised retail prices for imported goods, and weakening confidence among aspirational consumers in their ability to generate future income, thanks to the rapid adoption of AI.
LVMH’s overall revenue fell almost 2% in 2024 and another 5% in 2025, and was down 6% in the first quarter of 2026. Its shares fell 28% from January to March, in its worst start to a year on record.
“You may have noticed that the world is in a pretty serious crisis in the Middle East,” Arnault told shareholders at the company’s annual meeting on Thursday. The outbreak of war in Iran halved expected growth for the first quarter, he added.
LVMH’s prospects now depend on how the crisis unfolds. If resolved relatively quickly, businesses can resume their “normal course,” he said, and “we would expect to see a return to growth in our various activities in the second half of the year.”
Meanwhile, Kering’s annual revenue has declined more than 25% since peaking in 2022, and Gucci in particular is struggling. Kering’s share price has almost halved since the beginning of 2022.
“Luxury retail is in crisis; it’s not a slowdown, it’s not a pause, it’s a crisis,” says Achim Berg, founder and CEO of industry consultancy FashionSIGHTS.
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While slowing economies and high-tech innovations are beyond the control of luxury companies, Berg notes that some wounds have been self-inflicted, in particular the decision of many of increase prices significantly as demand weakened, counting on its most loyal and wealthy customers to bail them out and maintain sales and margins.
While that may have worked in the short term, the steep increases ended up alienating many of its less wealthy customers, for whom a $5,000 or $10,000 handbag was (and is) not a trivial purchase.
“The products became very expensive to the point where, in particular, the aspirational customer just thinks there is no good value for money,” Berg said.
Those eye-watering prices have been particularly off-putting for Gen Z customers, a cohort expected to account for a quarter of global luxury spending by 2030, according to Boston Consulting Group. Members of Generation Z tend to avoid lavish spending for themselves, are heavily influenced by social media, and particularly value sustainability, none of which have been a particular strength of legacy luxury brands.
“Among younger generations, especially Gen Z, there’s almost been a revolt against some of these (high-end) brands,” observes Kelly Pedersen, who heads PwC’s global retail practice.
So what is likely to happen now? On the one hand, “affordable luxury” brands like Ralph Lauren and Tapestry, parents of Coach and Kate Spade, among others, are benefiting significantly from the shift away from higher-end brands. Their products are not only less expensive, but they have also proven to be more creative and agile in appealing to the preferences of younger buyers.
PwC’s Pederson further notes that the prevalence of LPG-1 use, with about one in five American households now having at least one LPG-1 user, favors affordable luxury brands. GLP-1 users begin to spend less on food and dinners and more on clothing as they lose weight.
Ralph Lauren’s annual revenue increased 10% between 2023 and 2025, reaching approximately $7 billion. Tapestry’s sales grew about 5% during the same period, reaching $7 billion. Meanwhile, each company’s share prices have roughly tripled from the beginning of 2023 until now.
Luxury retailers, naturally, are trying to respond. They are focusing on lower-priced accessories such as keychains and sneakers as a way to appeal to younger customers, streamlining their product offering and hiring new creative directors (more than 25 top designer positions have been filled at fashion and luxury houses in the past 18 months, according to Berg) to inject some polish into their latest collections.
Silver and gold: But those creative efforts will take time to bear fruit, and in the meantime, many businesses are losing customers. Bain estimates that the luxury sector has lost 70 million customers worldwide between 2022 and 2025.
In the end, the high-end luxury industry may have to accept that the meteoric growth of the golden years has given way to a less shiny silver or copper era in which single-digit annual revenue growth is the best they can hope for.
“It’s a reckoning for the industry,” says Berg.
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