After two years of sluggish demand, European luxury brands are beginning to detect early signs of recovery in China though executives remain wary of declaring a full rebound in one of their most critical markets. The global luxury sector, estimated at around \$400 billion, has been heavily reliant on Chinese consumers, who account for nearly a third of worldwide sales. The recent slowdown in China’s economy has weighed heavily on the industry, prompting cautious optimism as some companies report modest improvements.
LVMH, the world’s largest luxury conglomerate, recently noted encouraging signals from China, sparking investor optimism. However, other major players have offered more tempered assessments. L’Oréal CEO Nicolas Hieronimus acknowledged a return to growth in China for the first time in two years, driven largely by the company’s high-end beauty brands like Lancôme and Helena Rubinstein. Still, he warned against overconfidence, emphasizing that one quarter of growth does not establish a trend. Despite the positive development, L’Oréal’s overall quarterly performance fell short of expectations, leading to a drop in its share price. Looking ahead, the industry is closely watching China’s Singles’ Day on November 11 a major shopping event akin to Black Friday in the U.S. as a potential bellwether for consumer sentiment.
Hermès, another French luxury powerhouse, echoed the cautious tone. The company reported a slight uptick in Chinese activity during the third quarter, particularly during the Golden Week holiday in early October. CFO Eric de Halgouët highlighted “more dynamic activity” during that period and pointed to tentative signs of stabilization in China’s real estate and equity markets. Still, he emphasized that it’s too early to draw broad conclusions.
Among the major players, LVMH appears the most upbeat, though even its CFO, Cécile Cabanis, acknowledged that a full recovery in China will take time. As the year end shopping season approaches, luxury brands are balancing hope with realism, navigating a complex Chinese market that remains both vital and volatile.