Core Insights - The global luxury goods sector is experiencing a prolonged slowdown in 2025, with personal luxury goods spending expected to remain flat at approximately €1.44 trillion ($1.56 trillion) after a contraction in 2024, marking one of the weakest cycles since the Great Recession [1][4] - Despite the current challenges, forecasts indicate a potential rebound in 2026, driven by renewed demand in emerging markets and early signs of recovery in Chinese consumption patterns [2][4] Industry Overview - The luxury sector is anticipated to grow between 3% and 5% in 2026, a significant improvement from the flat performance in 2025, with emerging markets, particularly Asia Pacific, playing a crucial role [4][6] - Leading brands are adjusting strategies by easing aggressive price hikes and refreshing product assortments to re-engage consumers [5][10] - The U.S.-China trade dynamics are expected to stabilize, reducing cost uncertainties for luxury goods companies and creating a more favorable environment for global luxury demand [7][10] China Market Dynamics - China's luxury goods market, valued at hundreds of billions of U.S. dollars, is positioned for mid- to long-term growth, supported by an expanding middle class and increased digital retail penetration [8][10] - Domestic luxury spending in China stabilized in the latter half of 2025, indicating potential for renewed growth in 2026 [9][10] Company-Specific Insights - **Kering**: Expected to benefit from a rebound in 2026, particularly through its Gucci brand, with projected earnings growth of 35.2% on revenue growth of 1.4% [11][12] - **Richemont**: The company's jewelry division remains resilient, and easing tariff uncertainties may alleviate previous pressures on its share price, with expected earnings growth of 10.3% on revenue growth of 6.8% in fiscal 2027 [13][14] - **Burberry**: Undergoing a brand repositioning, Burberry could see a significant tailwind from stabilization in China and emerging markets, with projected earnings growth of 67.9% on revenue growth of 3.9% in fiscal 2027 [15][16]

Core Insights - LVMH's sales growth in the latest quarter has positively impacted the broader luxury sector, leading to significant stock price increases for various luxury brands and boosting Bernard Arnault's net worth by over $18 billion [1][4]. Company Performance - LVMH reported third-quarter revenue of €18.3 billion (approximately $21.3 billion), marking a 1% increase in sales, which is the first quarterly growth this year [2][5]. - The company's selective retailing unit, particularly Sephora, showed the strongest growth with a 7% increase, indicating solid demand in the U.S. and Europe, and an improvement in Asia (excluding Japan) [5][6]. Market Reaction - Following LVMH's earnings report, shares of Hermès rose by 7.3%, Kering by 4.7%, and L'Oreal by 3.1%, among others, reflecting a rally in the luxury sector [3][6]. - The CAC 40 index, which includes major luxury brands, closed nearly 2% higher, marking the largest single-day increase for the index this year [1][3]. Industry Context - LVMH is viewed as a bellwether for the global luxury goods market, with a market capitalization of around €305 billion, making it one of Europe's most valuable companies [6]. - The recent earnings report signifies a recovery for LVMH after two consecutive quarters of sales declines, highlighting a return to "powerful innovative momentum" in the luxury sector [6].