The Tamesis
After two years of turmoil, the luxury goods industry is expected to extend its recovery from the third quarter into the fourth quarter, albeit with some difficult circumstances. Analysts predict that the upcoming fourth quarter earnings will show moderate growth in line with the third quarter, boosted by continued strength in U.S. stocks, signs of stabilization in China and early gains from adjustments in the luxury goods industry.
HSBC expects global luxury sales to grow 2.6% in the fourth quarter of 2025, following a 3.2% increase in the third quarter, a 0.8% decline in the second quarter and a 0.4% decline in the first quarter.
Compared with the fourth quarter of 2024, it will be more challenging due to the shopping frenzy that broke out after the US election. “The key theme for the fourth quarter of 2025, as investors have said, is ‘competitive comparisons,'” noted Erwan Rambourg, global head of consumer and retail equity research at HSBC. “Comparisons are more difficult on a basis, but I don’t think most companies will see a significant deterioration in trends, albeit on a tighter basis.”
An overlay analysis of two years is particularly informative. “Investors believe that most companies in the group will improve on a two-year basis, which gives some confidence that fundamentally things are looking up for the sector,” said Édouard Aubin, managing director at Morgan Stanley.
Other analysts have similar expectations. “While the recovery is still in its early stages, we believe Q4 can be the first proof point,” Zuzanna Pusz, managing director at UBS, wrote in a note.
Luca Solca, managing director of Bernstein, said: “With the good feedback from Dior to LVMH, the continued strength of Richemont’s jewelry industry and the stable development of Hermès, I think the probability of a constructive outlook is more than 50%.”
China is stable, the United States is accelerating
The industry is stabilizing in China despite continued macroeconomic challenges, including a weak property market and high youth unemployment. Brands are going the extra mile to create interest and traffic. Meanwhile, in the United States, stronger stock markets are boosting demand for luxury goods. “America’s rich may feel richer now, which translates into more luxury purchases,” Rambaugh noted.
In forecasts for the fourth quarter, Europe and Southeast Asia are expected to be weak links due to lower tourist spending, while in Japan, recent tensions between China and Japan over Taiwan may put pressure on Chinese tourists, Rambourg said. That said, the negative impact of currency changes will be huge. A stronger euro against the dollar and the yuan will weigh on European luxury goods companies as prices for European-made products rise overseas.
All of this points to an increasing focus on local consumers. “Partly because of the way the brand has grown, and partly because of currency fluctuations, the theme is selling to local people,” Rambaugh said. “I don’t think there’s much hope for Chinese or aspiring American consumers to return to Europe. All over the world, regional managers are focusing on what they can control: local consumers.”
Gaps between companies persist
Brunello Cucinelli kicked off the earnings season on Monday, reporting revenue growth of 11.9% year-over-year in the fourth quarter of 2025. Cartier owner Richemont will follow suit on Thursday, with sales expected to rise 8.3% after a 14% jump in its fiscal second quarter.
LVMH, the industry leader, expects sales to fall 0.2% in the fourth quarter, with its fashion and leather goods divisions expected to fall 2.9%, according to HSBC estimates. Sales in the segment fell 2% in the third quarter. According to HSBC estimates, Kering Group sales will fall by 5.3%, compared with a 5% drop in the third quarter, Gucci sales will fall by 14%, and Saint Laurent sales will fall by 4.2%. Meanwhile, Bottega Veneta is expected to roar for the group, with HSBC forecasting sales growth of 2.5%; Kering’s other brands, including Balenciaga, McQueen and Boucheron, are expected to rise 0.6%.
