Core Insights - The luxury industry is experiencing a gradual recovery, particularly in China, where sales have turned positive for the first time this year, indicating renewed consumer interest in high-end fashion and experiences [1][3] - Demand in Europe and the United States remains solid, reflecting resilient local consumption despite a cautious global economic backdrop [2] - LVMH's modest growth in the third quarter of 2025 marks a potential turning point for the luxury sector, suggesting that the worst of the slowdown may be behind, although recovery will be gradual [3] Regional Performance - Mainland Chinese consumers are showing increased appetite for luxury goods, helping to offset earlier weaknesses and restore confidence in Asia's growth contribution [1] - There is a noticeable improvement in overall trends across Asia excluding Japan, indicating broader regional stabilization after months of uneven demand [2] Challenges Ahead - Despite returning to modest growth, LVMH faces several structural and cyclical challenges that may impact performance into 2026, including weaker demand for high-end products and rising operational costs [4] - Luxury brands have increased prices significantly between 2020 and 2023, with an average hike of 36%, which is now dampening demand among aspirational buyers [5] - Lowering prices is not a viable option for luxury brands, as it would erode brand prestige; instead, companies may maintain current pricing while waiting for income growth and easing inflation [6]