The luxury market in China remains in a prolonged slump, and now even affluent consumers are starting to cut back on spending. Bloomberg reported on Friday (October 23) that, according to data from two market research firms, sales of French luxury brands Hermès and Cartier in mainland China between August and September this year fell by as much as double-digit percentages compared with the same period last year. These two brands had previously maintained relatively stable performance even as China’s luxury market weakened, but they are now being hit as well. Some executives at major luxury groups fear the downturn could extend into 2027.
According to Bloomberg, citing two research firms that track luxury industry data, Hermès and Cartier had been relatively insulated from the broad cooling of China’s luxury market that began in June this year, but their sales performance deteriorated markedly in August and September. (The report did not disclose the exact declines for each brand from the two research firms, only noting that some declines had reached double-digit percentages.)
It is not just Hermès and Cartier. Sales of the top 25 luxury brands in China, including Louis Vuitton and Gucci, also declined further, posting double-digit percentage drops in both August and September.
Notably, China’s seven-day National Day Golden Week holiday in early October failed to reverse the market slump. Bloomberg, citing unnamed sources familiar with the matter, reported that although Chinese consumers increased spending on travel, luxury consumption remained weak. Some executives at major luxury groups have begun to worry that the downturn could widen further and even extend into 2027.
The report noted that the Chinese government’s recent tightening of tax scrutiny on overseas assets, combined with a cooling of the rally in AI-related stocks, has put pressure on the wealth of some affluent individuals, shaking the luxury industry’s long-held belief that “ultra-wealthy consumption is relatively immune to economic downturns.”
Over the past few years, China’s prolonged property market slump and slowing economic growth have led many middle-class consumers to cut back on high-priced luxury goods. International luxury brands have therefore relied more heavily on their wealthy, high-end customers to support sales, but now this previously stable group of consumers is also starting to rein in spending, putting even greater pressure on the market.
HSBC analyst Anne-Laure Bismuth noted in a report this month that over the past three years, whenever her team visited Asian consumer and luxury markets, the industry consensus was that while conditions were tough, things would improve the following year. However, after meeting with industry figures in Hong Kong, Xiamen, and Shanghai this year, she saw no clear timeline or evidence for when China’s luxury consumption might recover.
The weak consumption is also reflected in the latest earnings reports from luxury groups.
Hermès’ third-quarter results, released on Thursday (the 22nd), showed that revenue in Asia-Pacific excluding Japan, which includes China, was flat year-on-year at constant exchange rates, below analysts’ expected growth of 1.55%. The region generated €5.182 billion in revenue in the first nine months of this year, accounting for roughly 42% of the group’s total revenue over the same period, making it one of Hermès’ most important markets.
Hermès CFO Eric Du Halgouët acknowledged at the earnings briefing that China’s overall economic environment remains challenging, with weak financial markets and ongoing tax-related actions making business conditions there more complicated. Neither Hermès nor Cartier responded to Bloomberg’s requests for comment.
However, luxury industry research firm JL Warren pointed out that demand in other Greater China markets such as Hong Kong and Macau remains relatively stable, partially offsetting the sales declines of high-end jewelry brands like Cartier in mainland China, though the weakness of the mainland market continues to weigh on luxury groups’ results.
Other international luxury brands have also been affected. LVMH, the parent company of Louis Vuitton, saw sales in mainland China fall by double-digit percentages in the third quarter, while purchases by Chinese consumers overseas declined by mid-single-digit percentages, causing the group’s revenue in Asia excluding Japan to fall 5% on an organic basis — the only region to post negative growth.
Gucci’s situation is also grim. According to the latest earnings report released by parent company Kering on the 22nd, Gucci’s third-quarter revenue was €1.291 billion, down 6% year-on-year on a comparable basis, falling short of market expectations. Sales through the brand’s directly operated retail network fell 9% year-on-year, with weak Chinese consumption one of the factors dragging down results. Kering’s overall third-quarter revenue was €3.345 billion, down 1% year-on-year on a comparable basis.
Bloomberg noted that as economic conditions change, Chinese consumers have become more cautious about discretionary spending. Rather than buying expensive, logo-heavy luxury goods, more people are choosing to spend their money on experiential consumption such as travel and dining. Some younger consumers’ preferences are also shifting toward understated designs that emphasize craftsmanship and quality, driving the so-called “Quiet Luxury” consumption trend.
China’s official retail data likewise reflect the pressure on the consumer market. According to China’s National Bureau of Statistics, the year-on-year growth of total retail sales of consumer goods slowed to 0.4% in August this year, and although it rebounded to 1.1% in September, sales of some high-priced goods remained weak.
Among them, retail sales of gold, silver, and jewelry fell 17.5% year-on-year in August and continued to decline 9.6% in September; retail sales of automobiles fell 18.5% year-on-year in August, with the drop widening further to 21.2% in September, showing that demand for some high-priced goods has yet to recover.
Jacques Roizen, co-founder of Shanghai-based consultancy Foresight Performance Partners, pointed out that because China’s luxury market fell sharply in 2026, the comparison base for next year will be relatively low, which could help some international luxury groups return to revenue growth.
However, he also cautioned that even if future earnings figures improve, it does not mean demand for luxury goods in China has truly recovered. In his view, China’s luxury market faces structural problems: many middle-class consumers who once aspired to a luxury lifestyle have exited the market, while affluent consumers have become more cautious — and these fundamental pressures are unlikely to disappear anytime soon.
