The luxury goods slowdown has entered its fourth year, and this week's numbers from the industry's largest group did little to suggest it is ending. LVMH reported third-quarter revenue of €18.5bn, with organic growth of just 1%, down from 3% in the previous three months, according to Hargreaves Lansdown. The headline was not a disaster. The detail underneath it was more telling: the division that makes Louis Vuitton and Dior handbags went backwards, while jewellery, watches, champagne and Sephora kept growing.
Put that alongside a tax deadline for China's wealthiest families and a third straight month of falling luxury card spending in the United States, and a clearer picture emerges of how rich consumers are behaving in late 2026.
Inside LVMH's Q3 2026 results
LVMH's fashion and leather goods business, by far its largest, saw organic sales fall 5% in the quarter to about €8.25bn. Analysts had expected a decline of 2% to 2.5%, and the drop reversed the modest 1% rise the division managed in the second quarter. LVMH put the weakness down to softer demand in China, which offset strong buying in the US.
Elsewhere in the group the tone was brighter. In the third quarter, on an organic basis:
- Watches and jewellery rose 6%, after 8% growth over the first nine months, helped by Bulgari's new high jewellery line and Tiffany.
- Selective retailing, mainly Sephora, grew 8%.
- Wines and spirits rose 6%.
- Perfumes and cosmetics edged up 1%.
Over nine months, FashionUnited reports, group revenue was €57.15bn: 2% higher on an organic basis but 2% lower as reported, once currency moves and disposals are counted. The group sold Marc Jacobs to WHP Global on 1 September. Christian Dior was a relative bright spot, with strong demand for its ready-to-wear and leather goods and a new flagship on Milan's Via Monte Napoleone. The shares slipped 1.7% to €377.80 on the morning after the release.
China's tax crackdown on the wealthy
The China problem is no longer just a weak economy. Beijing has introduced a 20% tax on offshore trusts, and wealthy Chinese who used such structures to hold assets have until 22 October to declare and pay years of back taxes, Reuters reported. Chinese consumers account for roughly a fifth of global luxury purchases, so a liquidity squeeze among the very richest matters well beyond the mainland.
The effect has been building for months. In August, Bloomberg reported that sales at China's 25 largest luxury retailers fell by more than 10% in July, worse than June, reversing the better start to the year. Louis Vuitton, Dior, Gucci, Bottega Veneta and Balenciaga were among the brands affected.
Alexis Bonhomme of the consultancy Trinity Asia told Reuters that some buyers may face cash constraints until the tax is paid, adding that "right now, the mood just isn't there." The point is about timing and confidence as much as wealth: these families have not stopped being rich, but few want to be seen spending conspicuously while the tax authorities are paying attention.
US luxury spending: the engine sputters
For two years the United States has carried the industry while China faltered. That support now looks less secure. Citi's credit card data showed US spending on luxury brands fell 6% year on year in September, after 4% falls in both July and August, the New Straits Times reported, with uncertainty ahead of the 3 November midterm elections weighing on confidence. Surveys from the Conference Board and the University of Michigan point to more cautious consumers, and rising Treasury yields and mortgage rates threaten to cool the economy further.
There is a nuance worth noting. Card data captures a broad base of shoppers, not just the wealthiest. Citi itself argued that brands with more exposure to the top end should hold up relatively well, supported by gains in equity markets. LVMH's own description of US demand as buoyant fits that view: the very rich are still buying, even as the aspirational shopper pulls back. Within Citi's data, watches and jewellery deteriorated while leather goods and ready-to-wear improved on the previous month, a reminder that the patterns differ from one dataset to the next.
European luxury stocks have paid the price
Investors have been unforgiving. Even before this week's results, shares in LVMH and Hermès were each down about 40% this year and trading near multi-year lows, while Gucci owner Kering had fallen 29%, according to Reuters. The industry, worth some $350bn, has also had to absorb the fallout from the war with Iran on travel and tourist shopping. Morgan Stanley analysts, quoted in the same coverage of Citi's data, warned that the US weakness leaves little room for the return to growth the sector had hoped for after two years of contraction.
The wealthy have not stopped spending. They have stopped spending loudly.
What it says about how the wealthy are spending
Read together, the numbers describe a shift in taste more than a collapse in demand:
- Discretion over display. Reuters noted that understated "quiet luxury" names such as Brunello Cucinelli and LVMH's Loro Piana have outperformed, while louder, logo-led houses like Louis Vuitton and Gucci have struggled.
- Hard assets over handbags. High jewellery, with Richemont's Cartier singled out by Reuters, is benefiting from demand for precious materials that buyers see as holding their value. LVMH's jewellery and watch growth points the same way.
- Experiences and small indulgences. Champagne, spirits and beauty grew while leather goods shrank, suggesting buyers are still treating themselves, just at a different price point or in a different form.
- Geography matters more than ever. The same brand can be thriving in New York and stalling in Shanghai in the same quarter.
What to watch
The next fortnight is crowded. China's trust tax deadline falls on 22 October, the same day Kering and Hermès report their results, which will show whether the most exclusive end of the market is as resilient as many assume. Then comes the US midterm vote on 3 November. For brands selling to wealthy clients, the lesson of the past year is already clear: the money is still there, but it is more cautious, more private and more drawn to things that last.
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