China’s Luxury Spending Slowdown Weighs on Hermès, LVMH and Kering

Global luxury companies are facing renewed pressure in China as subdued consumer confidence and financial uncertainty weigh on demand for high-end fashion, leather goods and other premium products.

Recent third-quarter results from Hermès, LVMH and Kering point to weaker sales momentum in the Chinese market, according to Caixin Global. The slowdown matters to international luxury groups because China has been an important source of customers and growth, particularly during periods when demand in other major markets has been uneven.

Hermès reported revenue growth of 4.3%, its slowest pace since 2020, while sales in Asia excluding Japan were flat. LVMH reported a 5% decline in sales in Asia excluding Japan, and Kering recorded an 8% fall in the same broad regional category, Caixin reported. These regional figures do not represent China alone, but the companies and analysts cited in the report identified the Chinese market as an important factor affecting performance.

The results suggest that even high-end brands, which often rely on affluent consumers who are less sensitive to price changes than mass-market shoppers, are not entirely insulated from a broader spending slowdown. Luxury purchases can be postponed when consumers feel less confident about their financial prospects, property wealth or business income.

China's prolonged property downturn is one factor shaping that environment. Property has historically been a major component of household wealth, and uncertainty over home values can influence consumers' willingness to make discretionary purchases. When households feel less wealthy or become more cautious about future income, they may redirect spending toward necessities, travel, dining or savings rather than expensive fashion products.

Policy changes affecting wealthy individuals may also influence spending decisions. Caixin reported that new offshore-trust tax rules have added to financial pressures for some affluent consumers. The effects will vary by individual circumstances, and the tax changes should not be treated as the sole explanation for the luxury market's weakness. Consumer confidence, property conditions, brand competition and changing preferences are also relevant.

The slowdown is prompting international brands to reconsider how they operate in China. Rather than relying solely on store expansion or broad marketing campaigns, companies are adjusting their retail strategies and seeking closer alignment with local customers. Kering has given Greater China teams more decision-making authority and is renovating stores, while LVMH has indicated that it remains committed to investment in the market despite the challenging environment, according to Caixin.

Brand-specific issues can also affect reported results. LVMH cited a trademark dispute involving Louis Vuitton and Chinese tea chain Moli Naibai as one factor that weighed on sales early in the third quarter. This illustrates why regional performance cannot be attributed to macroeconomic conditions alone: product mix, marketing, local competition and company-specific events may also shape the figures.

For the wider retail industry, the key question is whether the current weakness represents a temporary slowdown or a more lasting shift in consumer behaviour. Luxury companies have historically benefited from rising incomes and the expansion of affluent consumer groups in China. But changing attitudes toward conspicuous consumption, increased interest in value and a preference for experiences over material goods may alter the way consumers allocate discretionary spending.

The market is also becoming more competitive. Domestic brands have gained visibility across fashion, jewellery and other premium categories, giving Chinese consumers more choices beyond established European labels. International companies may need to sharpen product differentiation, strengthen local engagement and offer experiences that justify premium prices.

Analysts cited by Caixin expect luxury demand to remain subdued into 2027, with Bank of America forecasting growth of only around 1% next year. Such forecasts remain estimates rather than confirmed outcomes and could change if consumer confidence, property conditions or spending patterns improve.

For global luxury groups, China remains a strategically important market, but the latest results underline that its size does not guarantee rapid growth. Companies will need to balance long-term investment with careful cost management and a better understanding of evolving local demand. A sustained recovery will depend not only on brand appeal, but also on whether consumers regain confidence in their financial outlook.