LONDON — The luxury verdict is in — the pool of aspirational buyers is shrinking and brands need to entertain their wealthiest and most loyal clients with genuine creativity.
“Selling more to existing consumers will require sustained relevance and a higher innovation tempo,” Bernstein analyst Luca Solca said in a note on the luxury sector, arguing that brands must lean more heavily on those who already own the iconic essentials and will only part with additional money for genuinely new and compelling products.
That thread — confirming that the post‑pandemic luxe boom has fractured into a K‑shaped market — ran through a week or so of results from many of the sectors top players, including LVMH Moët Hennessy Louis Vuitton, Kering, Hermès, Prada Group, Zegna and Brunello Cucinelli.
The luxury bigwigs also signaled continued strength in the U.S., while there is still a good deal of work to still do in China. For Europe, Prada’s statement that its Mui Mui business there was “subdued albeit improving” could apply to many. Big brands like Dior and Gucci also cosigned the belief that high-profile creative changes would gin up business changes with better results.
“Broadly, the recovery continued in the second quarter, with some acceleration, although results remain mixed across brands,” said Jelena Sokolova, senior equity analyst at Morningstar.
Now the trick is going to be to keep the momentum going.
Sokolova remains “cautiously optimistic.”
“We expect several positive trends to continue, including the stabilization of real estate prices in China and accelerating creative momentum driven by a higher share of new designer collections at brands such as Dior and Gucci,” she said. “However, comparisons become more challenging as the recovery began in [third quarter] 2025. U.S. demand momentum is showing signs of acceleration rather than abating, although volatility in equity markets could weigh on performance.”
The Market Reacts, Unevenly
On a brand level, Hermès is still delivering growth at the very top. But it wasn’t quite enough to keep the investors happy, and prompted an 11 percent stock sell off on Wednesday. And there was little sign of recovery as of Friday, when the stock closed down 1.2 percent for the day to 1,531 euros.
Shares of LVMH and Kering are stabilizing or slowly healing. Outside of the mega groups, strong contenders like Prada are growing sales but seeing margin and leverage move the wrong way, and mid‑scale groups like Zegna and Brunello Cucinelli are outpacing larger rivals by leaning hard into direct‑to‑consumer and parts of the Asia‑Pacific region.
Looks from Hermès’ chapter two presentation.
Joel Barhamand/WWD
If Hermès is a luxury weather vane, it’s pointing to changes that the whole sector is adjusting to.
Second‑quarter sales at Hermès rose 6.7 percent at constant exchange to 4.1 billion euros. But the underlying geographic picture pointed to just where the brand’s top clients are today. U.S. sales climbed 13.7 percent, total Europe advanced 7.4 percent, and Asia overall grew 4.4 percent, with Japan up 12.3 percent.
“We see that our aspirational customers are suffering more than the resistance of our more wealthy customers,” said Axel Dumas, chief executive officer at Hermès, on a call with analysts.
On China, he characterized the situation as still far from a full recovery. “We have a situation that has stabilized in China, but I don’t see a great improvement,” he said, citing the drag from the real estate and stock markets on household confidence and savings patterns in the country.
RBC analyst Piral Dadhania said the numbers reinforced Hermès’ position as the luxury industry’s most resilient player at a time when many brands continue to struggle, posting results that were largely in line with analysts’ expectations, with “no major surprises.”
“In tougher periods of luxury demand, Hermès’ relative defensiveness is more attractive as it is likely to suffer less than peers, given its absolute luxury brand positioning and supply constrained model for its most coveted products,” he added.
Backstage at Dior fall 2026 couture
Delphine Achard/WWD
Signs of Stabilization
At LVMH, after seven consecutive quarters of declines, its core fashion and leather goods division finally returned to growth in the second quarter, with sales rising 1 percent on an organic basis.
The improvement was driven by Christian Dior, where creative director Jonathan Anderson’s first products have begun landing in stores.
Chief financial officer Cécile Cabanis said Dior outperformed the division in the first half, with “all clienteles” up and double‑digit sales growth among U.S. and Japanese customers. The house is seeing strong uptake in women’s ready‑to‑wear and leather goods.
“We’ve made a lot of progress,” Cabanis said. “What we are offering is getting success, and there will be more to come.” She acknowledged that creative renewal had created some short‑term supply‑chain complexity and occasional shortages on key lines, but insisted that “the trend is positive and accelerating.”
China, however, remained a swing factor. Cabanis said overall Chinese demand was flat, with spending shifting from domestic to overseas shopping and increasingly clustered around big events. That left Asia as the only region not to show sequential improvement in the second quarter, even as the U.S., Japan and the rest of Asia posted solid gains.
Morningstar’s Sokolova said, while performance in fashion and leather goods remains below that of some peers despite the improvement, LVMH is “well positioned to return to industry outperformance” over the long term, supported by creative momentum at Dior, ongoing innovation at Louis Vuitton and the group’s ability to invest behind its brands.
Gucci cruise 2027
Giovanni Giannoni/WWD
Kickstarting Kering
After a long stretch in the wilderness, Kering is finally turning around under CEO Luca de Meo. The group this week posted its first comparable sales increase in three years, with second‑quarter revenues up 1 percent at reported exchange rates and 2 percent on a comparable basis to 3.65 billion euros.
“All the key levers that are within our control — from brand execution and store optimization to cost discipline and inventory management — are tracking in line with, or ahead of, our expectations,” de Meo told investors. “The return to growth in the second quarter was, I think, an important milestone, but we are still at the beginning of the journey, and we remain realistic about the challenges ahead.”
Gucci showed important signs of stabilization. Organic sales fell 2 percent in the second quarter, versus an 8 percent decline in the first quarter and better than the roughly 4.7 percent drop analysts had expected.
Anne-Laure Bismuth, head of consumer luxury and sporting goods at HSBC, said Kering is moving into the right direction, and upgraded its stock to buy.
“We believe the group is focusing on the right priorities to regain momentum and reengage with the aspirational customers, particularly for the Gucci brand, with a focus on product creativity, quality and competitive pricing,” she said.
Prada fall 2026
Adam Katz Sinding/WWD
The Flavor of Italy
Italian luxury groups Prada, Zegna and Brunello Cucinelli are emerging as some of the sector’s quietly effective operators, delivering above‑market top line growth this year.
Prada reported first‑half revenues up 11 percent to 3.05 billion euros, or 16 percent at constant exchange rates. Excluding Versace, which it acquired and consolidated at the end of last year, organic growth was up 5 percent.
“In a geopolitical and macroeconomic scenario that remained turbulent, we continued to execute with rigor,” chairman Patrizio Bertelli said. “Our commitment to the highest standards of product excellence, nurturing craftsmanship and creativity as non‑negotiable pillars, allowed us to reach 22 quarters of uninterrupted organic growth.”
Group CEO Andrea Guerra believes Prada’s further growth potential depends on whether it can “satisfy an unbelievable demand from top spenders, which Prada has somehow been reluctant to do in its history.”
“The top spenders are there; they drive the market, they are even stronger than before, they’re wealthy, and we need to gain our fair share there. I think that we are ready to pamper and service these consumers in the best possible way,” Guerra added.
A preview look at Zegna summer 2027.
Katie Jones/WWD
Zegna’s first‑half revenues rose 6.4 percent to 987.3 million euros, up 9.3 percent on an organic basis.
“I call this the reward of patience,” said Gildo Zegna, executive chairman. “We are reaping the fruits of years of investments in the products, strategies, governance, research and development, and even the ability to sometimes say ‘no.’”
Carolina Cucinelli, Brunello Cucinelli, Federica Benda, Camilla Cucinelli and Riccardo Stefanelli.
Lexie Moreland/WWD
And Brunello Cucinelli’s revenues rose 9.5 percent at current exchange rates to 749.4 million euros in the first half. The Americas were the company’s biggest market by sales and key growth engine, with revenue up 13.6 percent.
Brunello Cucinelli, executive chairman and creative director, was, as usual, upbeat.
“We closed the first half of the year with results that we view as truly, truly outstanding,” he said. “We have the impression that the brand is enjoying an exceptionally favorable momentum across the world, with our boutiques embodying our stylistic identity, our way of working, our way of engaging with others and, ultimately, the lifestyle in which we have always believed.”
Now, Cucinelli and the rest of luxury will have to do it all over again in the second half and prove out that the gains they’ve seen so far this year are for real.
After the summer holiday, of course.
