Luxury's Great Divide: America Buys, China Retreats, Logos Fade

On October 23, Kering's shares fell 12% in a single session. Gucci, the house that made the group, had reported another 6% fall in sales, and its revenue has roughly halved in three years. Ten days earlier LVMH had told investors that its Fashion & Leather Goods division, the engine behind Louis Vuitton and Dior, fell 5% in the third quarter, when analysts had expected a decline of under 2%. By the end of results season, executives were, in Reuters' words, buckling in "for a tough winter."

The luxury industry in 2026 is not in a crisis that hits everyone at once. It is in something harder to read: a split. Some houses are opening stores and hiring. Others are closing dozens of stores and cutting prices. The same week produced Hermès leather goods growing 10.8% and Gucci's own stores selling 9% less. Anyone working in luxury retail, or hiring for it, needs to know which side of the line their house is on.

A market that has already lost 20 million clients

The quarter lands on a weakened base. According to Bain & Company and Altagamma, the personal luxury goods market contracted 2% in 2025 to €358 billion, and lost nearly 20 million customers in the process. The active client base is estimated at about 330 million, against roughly 400 million in 2022. Bain forecast a return to 3% to 5% growth in 2026. On third-quarter evidence, the industry's largest group is growing 1% on an organic basis, Kering is flat, Prada has slowed from 8% organic growth a year ago to 1%, and Moncler is flat. The top of that range looks ambitious.

The clients who left are largely the aspirational ones: the occasional buyer of a bag, a belt or a pair of sneakers, priced out by years of increases. What remains is a narrower market built around very wealthy clients, and it behaves very differently from the one the industry spent the 2010s building stores for.

The end of the price-increase decade

For most of the past decade, raising prices was the industry's most reliable source of growth. That lever is breaking. Two people at Kering told Reuters that Gucci has begun cutting prices on selected products, including in China. Its first sneaker under the designer Demna, the Drip, sells for about $1,000 in the United States and is labelled Made in China, a choice Berenberg's analysts said creates "a potential tension between provenance and the luxury positioning Gucci is seeking to reclaim." Kering's chief financial officer, Armelle Poulou, insisted that Gucci is "not going through a repositioning in pricing."

Elsewhere the message is subtler. LVMH's chief financial officer, Cécile Cabanis, said price cuts at Louis Vuitton are not "advisable," and that jewelry price increases "should moderate" now that the price of gold is stabilizing. Harsharan Mann, a portfolio manager at Aviva Investors, put the question bluntly: will clients come back while prices still look "a bit out of touch"? For the first time in years, the houses have to justify the price on the ticket, and that job falls to the person on the floor.

China stopped driving the business

The second break is geographic. On LVMH's earnings call, Cabanis put Chinese demand "down mid-teens" and called the deterioration "abrupt," while adding that the group has "not stopped investing in China." Hermès, which rarely goes backward anywhere, was flat in Asia outside Japan. At Kering, lower traffic in mainland China and Japan weighed on Gucci, and the CFO named weak footfall in China as the main obstacle to its recovery. LVMH, meanwhile, has sold most of DFS, the travel retail chain built on Asian tourism.

For a decade, the industry's growth plans started in Shanghai. The third quarter of 2026 is the clearest sign yet that they now start somewhere else.

America is holding the industry up

Cabanis said LVMH's American clients "held up well, up mid-single digit." Hermès grew 8.8% in the Americas at constant exchange rates, against 4.3% for the group. Prada's Americas grew 5% organically in the quarter while the group managed 1%. North America was Gucci's most resilient market and helped drive Saint Laurent's growth. EssilorLuxottica grew 4.7% in North America. Swiss watch exports to the United States jumped 86% in September, although that partly reflects a collapse a year earlier, when tariffs hit.

America is not uniformly strong. Moncler's Americas grew only 2%, and Cabanis conceded that American clients "contributed a bit to the slowdown" too. But it is the market the houses are building in. Hermès reopened an enlarged San Diego store in July, opened at Plaza del Lago in Chicago in August and in Williamsburg, Brooklyn, in September. Moncler unveiled its largest flagship anywhere on September 10: 23,680 square feet over two levels at 767 Fifth Avenue.

Craft is selling. Logos are not.

The third divide runs by category, and it may be the most telling. LVMH's Watches & Jewelry division grew 6% while its fashion fell 5%. Kering Jewelry grew 11% while Gucci fell 6%. Hermès leather goods grew 10.8% while its ready-to-wear fell 2% and its watches fell 6%. Brunello Cucinelli, the clearest case of quiet luxury, grew 13.5% in the quarter and raised its full-year forecast to about 12%.

Demand did not leave luxury. It left the products whose main appeal was the logo, and moved toward objects that hold their value, craftsmanship that shows without a monogram, and houses that never discounted. That is a harder product to sell. It takes knowledge, patience and a relationship, not a line outside the door.

The creative reset has not paid off yet

In 2025 the industry went through its largest change of creative directors in a generation: Demna at Gucci, Jonathan Anderson at Dior, Matthieu Blazy at Chanel, Louise Trotter at Bottega Veneta and Pierpaolo Piccioli at Balenciaga, among others. Kering also changed its chief executive, bringing in Luca de Meo from the car industry. The third quarter of 2026 is the first real test of that bet, and at Gucci it has not passed yet. Kering says the recovery will be "gradual" and that its priority is "to rebuild desirability." JPMorgan's Chiara Battistini said the progress "remains in its very early stages."

Fewer doors, harder floors

The consequences reach the stores. Kering made 105 net closures in the first nine months of 2026, 128 closures against 23 openings, and now plans at least 125 for the year. In March, Saks Fifth Avenue filed notices for about 1,200 job cuts at US stores as part of its bankruptcy reorganization. LVMH says its total selling space has not changed in twelve months, so openings are balanced by closures, and its stated priority is "cost discipline and efficiency." Hermès, by contrast, ended June with 27,107 employees, up from 25,697 a year earlier. The houses that are growing are still hiring. The others are concentrating fewer people in fewer, bigger stores, the shift we described in Fewer Doors, Bigger Floors.

What the quarter means for luxury careers

• Know which side your house is on. Growth at Hermès, Cucinelli or a jewelry maison and contraction at a logo-driven fashion house are different careers in the same industry. Before accepting an offer, look at the last two quarters, not the brand's reputation.
• Hard luxury is where the demand is. Jewelry and watch houses need advisors who can present a high jewelry piece over an hour, and after-sales specialists who keep a watch client for a decade.
• The American client is carrying the industry. New US stores need store leaders and client advisors, and the people who already hold a book of American clients are the ones houses compete for.
• Selling has become harder, and more valuable. When prices are questioned and traffic falls, houses keep the people who can turn a relationship into a sale without a discount.

None of this is new for watches and jewelry. We called it Hard Luxury's American Hour in July, and the third quarter confirmed it. The roles that hold their value through a downturn sit closest to the client: client development, store leadership and senior sales. Our salary guide shows what they pay, and our jobs board lists current openings, including jewelry and client roles in New York.

Building a US team in a divided market? Talk to us about your search