Photo: Getty Image Save Story Save this story Save Story Save this story Since the beginning of the year, share prices of LVMH, Hermès and Kering have fallen 40%, 39% and 30%, respectively, while Richemont remains roughly flat. And luxury’s performance in Q3 is unlikely to offer much reassurance to investors.
On average, based on eight key luxury companies, growth is expected to slow to 2.7%, compared with 7% in the second quarter of 2026, according to HSBC estimates. “We had turned more cautious on the sector in early September, because of all the news about the situation in China deteriorating and the tough comparison basis in the US,” says Anne-Laure Bismuth, HSBC’s head of luxury and sporting goods. “During our pre-close discussions with the companies, we realized that conditions were worse than we had initially anticipated, prompting us to lower our estimates across the board, with Richemont being the sole exception.”
Given Richemont’s significant outperformance — the group was up 20% in its fiscal Q1, versus an industry average of 7% — HSBC provides a more representative picture that excludes the group: anticipated luxury sector growth of 1.1% in Q3, down from 5.1% in Q2.
LVMH, the sector’s bellwether, is forecast to grow 1% in Q3, with its key fashion and leather goods division expected to fall 2%, per HSBC. This follows a return to positive growth for the all-important division in Q2 (+1%) , which was seen as an inflection point after seven consecutive quarters of negative growth.
“In the event of a weak Q3, some investors may be more inclined to view the slowdown in the luxury market as structural rather than cyclical, putting further pressure on valuations,” says Marion Ortelli, managing director at Ortelli & Co.
Here are the key analyst predictions for luxury’s Q3.
“There has been a sequential deceleration in China that’s partly linked to the introduction of a new tax on foreign assets,” Goldman Sachs luxury analyst Erwan Rambourg says. “There have been quite a few [Chinese] store closures, and I think the mood music is unsupportive of luxury.”
As for the questions likely to come up during earnings calls, Rambourg predicts: “What will it take for China to stabilize? How confident are you that Q3 will prove to be a low point and that we’ll see some improvement from here?”
Analysts think that the litigation between Louis Vuitton and local tea brand Molly Tea — whereby the latter was ordered to pay approximately $1.5 million to LV for the trademark infringement of its four-petal emblem, amid much pushback on Chinese social media — is having an impact on the house’s sales in the region. Asked about it during the LVMH Q2 earnings call, CFO Cécile Cabanis replied: “ I’m sure that you agree that IP is an absolute key asset for us, and we diligently protect our brands. Our maisons handle trademark infringement in many countries very regularly, including China. This case just received media attention.”
“I think it will have an impact, but I still think it will be temporary,” says Bismuth.
But it’s not just China. South Korea’s luxury boom in the second quarter, fueled by wealth generated in the tech sector, particularly AI, is expected to moderate in Q3. “It’s easing off,” says Bismuth, citing a tougher year-on-year comparison basis.
Rambourg also highlights the weakness of tourist flows across Europe, noting that Asian visitors have yet to return and American ones remain the only meaningful source of demand. Middle Eastern…