Luxury’s US Lifeline May Be Wearing Thin

Hermès and Kering headline a packed week of luxury sales reports that will be closely eyed for signs of what’s working and what’s not for the beleaguered sector. Last week, LVMH’s third quarter update threw the spotlight on China, where the sector bellwether’s sales declined. With few signs a Chinese recovery is back on track, the US market – the industry’s current lifeline during this prolonged slump – will likely also come under greater scrutiny.

American shoppers have provided a rare pocket of growth for European fashion houses as they struggle to overcome depressed demand in China, which has struggled to emerge from a property crisis that continues to weigh on shopper appetite to splurge. Conflict in the Middle East, which had emerged as a bright spot for the sector, meanwhile, has darkened prospects in the small but fast-growing market.

Uncertainty has also crept into the US market in recent weeks. Luxury spending fell in each month of the third quarter, according to credit card data from Citi.

Exposure to the US varies among luxury brands. Among those reporting next week, Ferragamo gets roughly a third of its revenue from the region, compared to about a quarter for Zegna and Kering, and less than a fifth for Hermès and Prada.

Investors will be looking to see whether the recent weakness is a temporary wobble or growing evidence that the US market could lose momentum more broadly.

This week’s round of financial reports will offer some visibility on how high-end brands are navigating the choppy spending environment and geopolitical tensions as executives update the market.

This week’s earnings lineup:

Tuesday: Ferragamo

Wednesday: Moncler

Thursday: Hermès, Kering, Prada, Zegna

Hermès: What to Look Out For

Hermès is expected to report slowing sales for the third quarter, with HSBC forecasting 5 percent growth after a nearly 7 percent rise in the previous quarter. Business in China, its biggest market, will be a key focus after signs of a slowdown for the sector in the country. LVMH last week reported a double-digit decline in quarterly sales in China while Barclay’s flagged signs of muted demand for Hermès there over the summer, noting sought-after bags like the Birkin and Kelly models seem to have become more readily available.

After a long period of strong growth for Hermès, questions have risen over whether the brand’s resilience might be shifting, with the expansion potentially weakening its air of ultra-exclusivity. UBS recently downgraded the stock to sell, noting that growth has become less predictable as the business expands and its products are more widely available on the resale market.

Kering: What to Look Out For

Kering’s report is expected to reflect a difficult summer, with organic sales of Gucci, its key profit earner, down by around 5 percent, according to estimates from HSBC.

Demna’s Gucci collection presented last month in Milan drew largely positive reviews, but the challenge remains building a sustained recovery in sales. Investors will be looking for signs that the brand’s efforts to sharpen its product offering, improve quality and adjust pricing is helping to draw back shoppers.

While the Gucci turnaround remains a work in progress, other parts of Kering’s portfolio have shown more resilience. Following the departure of Anthony Vaccarello from Saint Laurent – which returned to growth in the first half of the year – new creative direction will be in focus.

Prada: What to Look Out For

At Prada, the focus remains on how the group is managing Miu Miu’s slowdown after several years of extraordinary growth. Quarterly retail sales growth at the brand has slowed to the low single digits – will this be enough to reassure investors that the group can steer a soft landing after sales nearly doubled in 2024 and rose by about a third in 2025.

According to a Bloomberg consensus of analyst estimates, retail sales are projected to have risen 1% at Prada and fallen 2.7% at Miu Miu.