After Years of Double-Digit Sales Growth, Luxury Retailers Face ‘Reckoning’
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Just a few years ago, it looked like sales for the luxury goods makers behind brands from Louis Vuitton to Tiffany’s and Gucci were riding a non-stop UP escalator.
Annual revenue for LVMH, which owns two of those three businesses, soared to roughly 86.2 billion euros ($94 billion) in 2023, an almost eightfold climb from 2000, thanks to trends including newly affluent Chinese consumers snapping up handbags and watches, and social media influencers preaching the virtues of personal brand-building.
The company’s market value topped a record $500 billion in April 2023, making CEO Bernard Arnault the world’s richest man at the time. Sales and earnings at Kering’s high-fashion brands, including Gucci, Balenciaga, and Bottega Veneta, and at other major luxury players such as Hermès and Richemont, saw similarly blistering growth.
Then, the escalator not only stalled but also began sliding downward amid escalating geopolitical turmoil, slowing growth in China, US tariffs that jacked up retail prices on imported merch and the sapping of aspirational consumers’ confidence in their future earnings power, thanks to rapid AI adoption.
LVMH’s overall revenues fell almost 2% in 2024 and another 5% in 2025, and were down 6% in the first quarter of 2026. Its shares declined 28% from January through March, for its worst start to a year on record.
“You’ll have noticed that the world is in a pretty serious crisis in the Middle East,” Arnault told shareholders at the company’s annual meeting on Thursday. The outbreak of war in Iran slashed expected growth for the first quarter by half, he added.
LVMH’s outlook now depends on how the crisis unfolds. If it’s resolved relatively quickly, businesses can resume their “normal course,” he said, and “we’d expect to see a return to growth in our various activities in the second half of the year.”
Kering’s annual revenues, meanwhile, have declined more than 25% since peaking in 2022, with Gucci in particular struggling. Kering’s share price has been cut almost in half since early 2022.
“Luxury retail is in a crisis; it’s not a slowdown, it’s not a pause, it’s a crisis,” says Achim Berg, the founder and managing director of industry consultant FashionSIGHTS.
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While slowing economies and high-tech innovations are beyond the control of luxury companies, Berg points out that some wounds have been self-inflicted, in particular, the decision by many to raise prices significantly as demand softened, counting on their most well-heeled and loyal customers to bail them out and maintain sales and margins.
