After Years of Double-Digit Sales Growth, Luxury Retailers Face ‘Reckoning’

Just a few years ago, it looked like sales for the luxury goods makers behind brands from Louis Vuitton to Tiffany’s and Gucci were riding a non-stop UP escalator.

Annual revenue for LVMH, which owns two of those three businesses, soared to roughly 86.2 billion euros ($94 billion) in 2023, an almost eightfold climb from 2000, thanks to trends including newly affluent Chinese consumers snapping up handbags and watches, and social media influencers preaching the virtues of personal brand-building. 

The company’s market value topped a record $500 billion in April 2023, making CEO Bernard Arnault the world’s richest man at the time. Sales and earnings at Kering’s high-fashion brands, including Gucci, Balenciaga, and Bottega Veneta, and at other major luxury players such as Hermès and Richemont, saw similarly blistering growth.

Then, the escalator not only stalled but also began sliding downward amid escalating geopolitical turmoil, slowing growth in China, US tariffs that jacked up retail prices on imported merch and the sapping of aspirational consumers’ confidence in their future earnings power, thanks to rapid AI adoption.  

LVMH’s overall revenues fell almost 2% in 2024 and another 5% in 2025, and were down 6% in the first quarter of 2026. Its shares declined 28% from January through March, for its worst start to a year on record. 

“You’ll have noticed that the world is in a pretty serious crisis in the Middle East,” Arnault told shareholders at the company’s annual meeting on Thursday. The outbreak of war in Iran slashed expected growth for the first quarter by half, he added.

LVMH’s outlook now depends on how the crisis unfolds. If it’s resolved relatively quickly, businesses can resume their “normal course,” he said, and “we’d expect to see a return to growth in our various activities in the second half of the year.”

Kering’s annual revenues, meanwhile, have declined more than 25% since peaking in 2022, with Gucci in particular struggling. Kering’s share price has been cut almost in half since early 2022. 

“Luxury retail is in a crisis; it’s not a slowdown, it’s not a pause, it’s a crisis,” says Achim Berg, the founder and managing director of industry consultant FashionSIGHTS. 

An Unforced Error

While slowing economies and high-tech innovations are beyond the control of luxury companies, Berg points out that some wounds have been self-inflicted, in particular, the decision by many to raise prices significantly as demand softened, counting on their most well-heeled and loyal customers to bail them out and maintain sales and margins. 

While that may have worked in the short term, the sharp hikes wound up alienating many of their less affluent customers, for whom a $5,000 or $10,000 handbag was (and is) not a trivial purchase. 

“The products got very expensive up to a point where, in particular, the aspirational customer just thinks there is no good value for the money,” Berg said.

Those eye-watering price tags have been particularly off-putting to Gen Z customers, a cohort expected to account for a quarter of global luxury spending by 2030, according to Boston Consulting Group. Gen Zers tend to eschew conspicuous spending for its own sake, are strongly influenced by social media, and particularly value sustainability, none of which have been particular strengths of legacy luxury brands.   

“Among the younger generations, especially Gen Z, there’s almost been a revolt against some of these [high-end] brands,” observes Kelly Pedersen, who heads up the global retail practice at PwC.  

What Price, Luxury?

So what’s likely to happen now? For one, “affordable luxury” brands such as Ralph Lauren and Tapestry, the parents of Coach and Kate Spade, among others, are benefiting significantly from the turn away from the highest-end brands. Not only are their products less unaffordable, but they’ve also proven more creative and nimble in appealing to the preferences of younger shoppers. 

PwC’s Pederson further points out that the prevalence of GLP-1 use, with about one in five US households now containing at least one GLP-1 user, favors affordable luxury brands. GLP-1 users start spending less on food and dining out and more on apparel as they lose weight.  

Annual revenue at Ralph Lauren increased 10% from 2023 to 2025 to about $7 billion. Sales at Tapestry grew about 5% over the same period, reaching $7 billion. Meanwhile, the share prices of each firm have roughly tripled from the beginning of 2023 to now. 

Luxury retailers are, naturally, trying to respond. They’re focusing on lower-priced accessories like keychains and sneakers as a way to entice younger customers, streamlining their product offerings, and hiring new creative directors (more than 25 top designer positions at fashion and luxury houses have been filled over the last 18 months, according to Berg) to inject some rizz into their latest collections.

Silver and gold: But those creative efforts will take time to pay off, and in the meantime, many firms are hemorrhaging customers. Bain estimates that the luxury sector has lost 70 million customers worldwide from 2022 to 2025.

In the end, the high-end luxury industry may just have to accept that the meteoric growth of the golden years has given way to a less lustrous silver or copper age in which single-digit annual revenue growth is the best they can hope for.

“It’s a reckoning for the industry,” says Berg.