Three years after demand first slowed, the world's biggest luxury groups are still waiting for Chinese shoppers to come back in force. LVMH, owner of Louis Vuitton and Dior, said its fashion and leather goods division fell 5% organically in the third quarter of 2026, as spending by Chinese customers dropped by a mid-teens percentage worldwide and by double digits on the Chinese mainland, according to figures reported by Inside Retail Asia and finews.com.
Kering, Gucci's parent company, reported a 1% decline in first-half 2026 revenue to €7.22 billion, and its chief financial officer warned ahead of third-quarter results that the period would be difficult, citing China among the contributing factors, according to finews.com. Richemont, owner of Cartier, performed differently: its April-to-June sales rose 20% at constant exchange rates to €6.33 billion, with double-digit growth across mainland China, Hong Kong and Macau, led by jewelry sales that climbed 24% worldwide, while its watch brands continued to decline in the region, according to finews.com.
Why analysts point to overpricing
French broadcaster BFM TV reported, in comments relayed by the news aggregator Titres Presse, that luxury houses took a long time to recognize and accept that they had pushed prices too far.
Bain & Company's report on China's personal luxury market said price increases and limited innovation 'made it difficult for consumers to justify purchases,' particularly in leather goods and watches — the two categories hit hardest, falling 8–11% and 14–17% respectively in 2025.
LVMH's chief financial officer, Cécile Cabanis, said she did not believe in drastic measures such as price cuts to revive demand, according to finews.com, signaling that major houses still prefer to defend brand positioning rather than reverse the price increases analysts blame for the slump.
A market that shrank for two straight years
According to Bain & Company, mainland China's personal luxury goods market contracted 3% to 5% in 2025, a significant moderation compared with the sharp decline recorded in 2024, though the firm's release did not give an exact percentage for that earlier year. Bain said the market began to stabilize in 2025, even as consumer confidence remained fragile.
China personal luxury market by category, 2025 (Bain & Company)| Category | 2025 change vs. 2024 |
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| Beauty | +4% to +7% |
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| Jewelry | 0% to -5% |
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| Fashion | -5% to -8% |
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| Leather goods | -8% to -11% |
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| Watches | -14% to -17% |
|---|
Cheaper alternatives and local brands gain ground
Part of the lost ground has shifted to grey-market channels and resale. Bain found that so-called daigou reselling — unofficial overseas purchases resold into China — rose 3% in 2025, while the secondhand luxury market grew 15% to 20%, though it remains under 10% of the size of the primary market.
At the same time, domestic Chinese luxury and premium brands have been gaining share, Bain said, through product aesthetics seen as more culturally relevant, digital-first marketing, and prices that are more competitive thanks to local access to inputs and supply chains — factors that have put pressure on the European houses just as Chinese shoppers became more price-sensitive.
The broader sector has also suffered outside fashion. finews.com reported that Porsche's China deliveries fell by about one-third over nine months in 2026, with its CEO, Michael Leiters, describing a self-destructive price war among carmakers in the market, while Ferrari shipped 185 vehicles to Greater China in the second quarter versus 274 a year earlier.
What recovery might look like
LVMH board member Antoine Arnault characterized the Chinese slowdown as cyclical rather than structural, according to Inside Retail Asia's analysis of the Q3 2026 earnings call, suggesting demand would return once macroeconomic conditions in China improve. Bain's outlook, published in its 2025 report, projected only modest growth for the Chinese luxury market in 2026, citing continued volatility and uncertainty.
Richemont's stronger quarter, led by Cartier and Van Cleef & Arpels jewelry sales up 24% worldwide, suggests the slowdown is not affecting all luxury categories equally — hard luxury and jewelry have held up better than leather goods and ready-to-wear fashion, the segments where price increases over the past several years were steepest.
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