Luxury fashion’s post-pandemic boom is clearly losing its shine. With LVMH and Kering set to report yet another quarter of declining sales, investor concerns are mounting about a deeper, more structural slowdown in the $400 billion global luxury market.&nbsp;According to analysts surveyed by Visible Alpha, LVMH’s fashion and leather goods division, home to flagship brands Louis Vuitton and Dior is expected to post a 6 per cent year-on-year drop in sales, marking the fourth straight quarterly decline. Kering, which is undergoing a reset of its crown jewel Gucci, is expected to show an even steeper slump, with sales down nearly 25 per cent from a year ago. As luxury houses prepare to release earnings, beginning with LVMH on Thursday, the mood is increasingly cautious.<h2>Tariffs, tightening wallets and China uncertainty</h2>Two major markets, the US and China are no longer delivering the kind of demand luxury brands have long banked on. Shoppers are pulling back in the face of slowing economies, higher prices, and geopolitical tensions. The looming threat of new US tariffs on European imports, as high as 30 per cent under President Donald Trump’s trade agenda is adding more pressure to an already fragile landscape.&nbsp;Raising prices further in the US would be a risky move now, especially after previous hikes appear to have alienated middle-income customers. “The level of price increases has been too much,” said Caroline Reyl, head of premium brands at Pictet Asset Management, pointing to brands that may have pushed too far for too long.&nbsp;The so-called aspirational shopper, middle-income consumers who stretch to afford luxury items has become increasingly price-sensitive, and is now pulling back from handbag purchases, traditionally a key growth driver.<h2>Investors are growing cautious</h2>Shares in top luxury firms reflect this unease. Since January, LVMH shares are down nearly 27 per cent, while Kering has dropped 15 per cent. Hermès and Richemont, which cater to ultra-wealthy clientele, have fared better — Hermès shares dipped just 0.9 per cent, while Richemont gained 1.6 per cent.&nbsp;Once Europe’s most valuable listed company, LVMH has fallen to fifth place, a symbolic slide that underscores investors’ shifting confidence. “It seems that investors are starting to worry about the long-term structural attractiveness of the industry,” analysts at UBS warned last week.<h2>Handbags out, hybrid shoes in?</h2>Luxury brands are now pivoting towards lower-priced offerings and beauty products in an attempt to reignite demand. Louis Vuitton and Prada have introduced more items under the $1,000 mark, such as hybrid ballerina-sneaker shoes, in a bid to stay accessible without diluting brand prestige. But this approach carries reputational risk. Analysts at HSBC cautioned that brand inconsistency could hurt loyalty, particularly at Louis Vuitton. “The aspirational skew of the brand is unhelpful currently,” the bank said.&nbsp;Meanwhile, Hermès and Prada are expected to be the outliers this earnings season. Analysts forecast 10 per cent growth for both, driven by Prada’s Miu Miu label, which has been gaining ground among younger shoppers. LVMH will report earnings on July 25, followed by Kering on July 29, and Hermès and Prada on July 30. Their performance may offer a clearer glimpse into whether the current downturn is a passing phase or a reset for the luxury sector’s post-pandemic highs.&nbsp;&nbsp;(With inputs from the agencies)&nbsp;

Economic pressures, US tariffs, and uncertainties in major markets like the US and China are impacting demand. Investors are cautious, with LVMH shares down 27% this year. Brands are pivoting to lower priced items, though this risks brand integrity.

Luxury fashion’s post-pandemic boom is clearly losing its shine. With LVMH and Kering set to report yet another quarter of declining sales, investor concerns are mounting about a deeper, more structural slowdown in the $400 billion global luxury market. According to analysts surveyed by Visible Alpha, LVMH’s fashion and leather goods division, home to flagship brands Louis Vuitton and Dior is expected to post a 6 per cent year-on-year drop in sales, marking the fourth straight quarterly decline. Kering, which is undergoing a reset of its crown jewel Gucci, is expected to show an even steeper slump, with sales down nearly 25 per cent from a year ago. As luxury houses prepare to release earnings, beginning with LVMH on Thursday, the mood is increasingly cautious. Tariffs, tightening wallets and China uncertainty Two major markets, the US and China are no longer delivering the kind of demand luxury brands have long banked on. Shoppers are pulling back in the face of slowing economies, higher prices, and geopolitical tensions. The looming threat of new US tariffs on European imports, as high as 30 per cent under President Donald Trump’s trade agenda is adding more pressure to an already fragile landscape. Raising prices further in the US would be a risky move now, especially after previous hikes appear to have alienated middle-income customers. “The level of price increases has been too much,” said Caroline Reyl, head of premium brands at Pictet Asset Management, pointing to brands that may have pushed too far for too long. The so-called aspirational shopper, middle-income consumers who stretch to afford luxury items has become increasingly price-sensitive, and is now pulling back from handbag purchases, traditionally a key growth driver. Investors are growing cautious Shares in top luxury firms reflect this unease. Since January, LVMH shares are down nearly 27 per cent, while Kering has dropped 15 per cent. Hermès and Richemont, which cater to ultra-wealthy clientele, have fared better — Hermès shares dipped just 0.9 per cent, while Richemont gained 1.6 per cent. Once Europe’s most valuable listed company, LVMH has fallen to fifth place, a symbolic slide that underscores investors’ shifting confidence. “It seems that investors are starting to worry about the long-term structural attractiveness of the industry,” analysts at UBS warned last week. Handbags out, hybrid shoes in? Luxury brands are now pivoting towards lower-priced offerings and beauty products in an attempt to reignite demand. Louis Vuitton and Prada have introduced more items under the $1,000 mark, such as hybrid ballerina-sneaker shoes, in a bid to stay accessible without diluting brand prestige. But this approach carries reputational risk. Analysts at HSBC cautioned that brand inconsistency could hurt loyalty, particularly at Louis Vuitton. “The aspirational skew of the brand is unhelpful currently,” the bank said. Meanwhile, Hermès and Prada are expected to be the outliers this earnings season. Analysts forecast 10 per cent growth for both, driven by Prada’s Miu Miu label, which has been gaining ground among younger shoppers. LVMH will report earnings on July 25, followed by Kering on July 29, and Hermès and Prada on July 30. Their performance may offer a clearer glimpse into whether the current downturn is a passing phase or a reset for the luxury sector’s post-pandemic highs. (With inputs from the agencies)

Luxury fashion is experiencing a downturn with LVMH and Kering reporting declining sales. LVMH's fashion division anticipates a 6% drop, while Kering may face nearly a 25% slump as they struggle with changing consumer behavior and price sensitivity.

Luxury giants feel the chill as US tariffs, high prices hit demand

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