Luxury is poised for a spectacular comeback— but is it time for savvy shoppers and investors to pounce?
Imagine spotting the next big wave in fashion before it crashes over the industry. For those eagle-eyed luxury enthusiasts and investors, the art lies in pinpointing trends with real staying power and homing in on the products that truly embody the spirit of the times. And right now, the spotlight is shining brightly on Bernard Arnault's LVMH empire.
But here's where it gets controversial... What if the revival isn't as glamorous as we expect?
The industry's leading indicator has just delivered promising signals from its third-quarter results, hinting at a recovery in luxury spending. While sales in its flagship fashion and leather goods division—home to iconic brands like Louis Vuitton and Dior—still dipped by 2 percent in that quarter, the pace of decline has eased significantly from a steeper 9 percent drop the period before. This slowdown suggests we're approaching the bottom of the luxury spending cycle, a turning point that could spark renewed optimism across the board.
A shift like this would be a boon for the entire sector, explaining why LVMH's report not only boosted its own stock by 14 percent on the day but also gave a lift to shares of competitors like Hermès, Burberry, and Kering (the parent of Gucci). Yet, LVMH stands to gain the most from this momentum.
Why? Well, consider the group's heavy focus on handbags and clothing—think the powerhouse Louis Vuitton label—which are primed for a stronger rebound than "hard" luxury items like jewelry. According to RBC's analysis, jewelry has surged ahead, growing at 4 percent annually from 2022 to 2025, while "soft" luxury (those fashion and accessory categories) has remained stagnant. This disparity means fashion brands have ample room to catch up and reclaim the spotlight.
And this is the part most people miss... Even the ultra-wealthy crave value—let's unpack that.
Fashion and leather goods have been working hard to enhance their appeal, which had been undermined by aggressive price increases and designs that failed to excite. "Value for money" might seem odd in a world where people shell out thousands for delicate fabrics or intricate craftsmanship, but it turns out even the richest individuals dislike feeling overcharged. The industry has dialed back on those hikes to keep things fair. In fact, LVMH's recent gains stemmed more from increased sales volume than higher prices. Plus, broader inflation in places like France and the U.S. has now caught up with LVMH's past adjustments, as noted by Bernstein research. Meanwhile, fresh talent from new designers is generating real buzz, drawing crowds at events like Milan and Paris Fashion Weeks, where debut collections are making waves.
Of course, any luxury resurgence won't match the explosive growth seen post-pandemic. Brands will tread more carefully before ramping up prices and flooding the market with high-end items. LVMH isn't the only player ready to capitalize on this soft-luxury renaissance, nor is it alone in showcasing innovative design. Take Demna Gvasalia at Gucci, who's already off to a strong start with his creative vision.
But here's the twist that could divide opinions... Is LVMH's recent stock slump actually a golden opportunity, or a red flag?
LVMH's shares have suffered during this downturn. Earlier this summer, they fell below their usual premium, trading at a discount to the S&P Global Luxury Index based on forward earnings multiples, and now they're barely ahead of the pack. Meanwhile, rivals like Kering and Burberry have already factored in some recovery potential into their valuations. And while the group's massive resources haven't paid off much in sales during tough times—when splurging on marketing doesn't translate to purchases—having that financial muscle positions LVMH perfectly for the upturn.
What do you think? Is LVMH the unbeatable king of luxury, destined to lead the charge, or could competitors like Gucci steal the show? Do price hikes in luxury really sting even the wealthy, or is that just a myth? Share your thoughts in the comments—do you agree with this analysis, or do you see a different path for the industry? Let's discuss!
Camilla Palladino © 2025 The Financial Times.
This article originally appeared in The Financial Times. (https://www.ft.com/content/a4d7982a-4c29-4ef4-99d1-682f4babc2cb)
