Photo: Courtesy of Gucci Save Story Save this story Save Story Save this story Despite the drag from China, the luxury sector returned to stronger growth in the second quarter.
HSBC anticipated a 4.3% increase in global luxury sales in Q2 2026 , compared with 4.9% in Q1. However, the average organic sales growth of the sector materialized at 7%.
Reactions across the stock market varied wildly. Hermès shares sank 11%, despite a 6.7% sales uplift in line with consensus expectations, as well as an operating profit margin of 41%. Meanwhile, Kering stock soared 17% after the group reported 2% growth, which included a 2% drop at its largest brand, Gucci.
“The wild swings reflect broader market nervousness,” says Charles-Louis Scotti, head of luxury goods equity research at Kepler Cheuvreux. “Moreover, after favoring defensive companies and the brands at the top of the luxury pyramid during the post-Covid normalization period, investors are now showing renewed interest in turnaround stories.”
While growth among soft luxury brands remained subdued, the jewelry “supercycle” continued unabated. Sales at Richemont’s jewelry maisons, including Cartier and Van Cleef & Arpels, rose 24%, smashing expectations of 13%. Sales at LVMH’s watches and jewelry division and Kering’s jewelry arm, the latter of which includes Boucheron and Pomellato, were up 11% and 18%, respectively. Sales at other Hermès sectors, including jewelry and home, were up 4%.
“Excluding the impact of the Middle East, the sector would have increased 8% in Q2, which is in line with the compound annual growth rate for the luxury sector between 2012 and 2019,” Scotti says. He notes, however, that the growth mix has shifted significantly post-pandemic, with performance now driven more by jewelry and less by ready-to-wear and handbags. “The overall luxury sector’s performance is particularly impressive given that spending by Chinese nationals is only marginally positive today, compared with its contribution of more than 50% of sector growth before the pandemic.”
Here are the key takeaways from luxury’s Q2 earnings.
“The sector’s growth is concentrated within a very narrow base,” says Morgan Stanley managing director Édouard Aubin. “Ultimately, it is being driven entirely by the Americans and the Koreans; Americans account for approximately 20% of total spending, while Koreans contribute 5-6%. Spending from all other nationalities was flat or declined. China is flat at best, and for a lot of investors, as long as they don’t feel that China is coming back in growth mode, they don’t want to be involved with the sector.”
LVMH CFO Cécile Cabanis confirmed that growth in the group’s fashion and leather goods division was driven by a relatively narrow customer base. “The bulk of the growth came from the Americans, who are up high-single digits. Koreans also contributed, but it’s a smaller base, so the impact is more marginal,” she explained during the company’s Q2 earnings call. “You had the negative impact of the Middle East, but it was no higher than in Q1, as the prolonged weakness was offset by sequential, gradual improvement. Then, Europeans, Japanese, and Chinese clienteles were flattish.”
At LVMH, Asia, excluding Japan, was the only region where growth deteriorated in the second quarter: up 4% and slowing from 6% in Q1, despite an easy comparison basis. In Q2 2025, LVMH sales in Asia, excluding Japan, were down 6%. At Kering, sales growth in Asia-Pacific improved but remained neg…