The global luxury market is experiencing a notable downturn in 2025, impacting major industry players like LVMH, Gucci, and Prada. This challenging period is attributed to a combination of factors, including reduced spending by American and Chinese tourists, currency fluctuations, and the implementation of new tariffs. LVMH reported a 3% year-on-year sales decrease in its first quarter, with its fashion and leather goods segment seeing a 5% revenue dip. This decline is partly due to a strengthening yen in Japan, which has reduced the purchasing power of Chinese visitors, and a weaker U.S. dollar affecting American tourists' spending abroad. The introduction of new tariffs on luxury imports by the U.S. government has further escalated prices, discouraging cross-border transactions.
Analysts at Bernstein have revised their forecasts, predicting a potential 2% decrease in worldwide luxury revenues for 2025, a significant shift from earlier positive growth projections. In response to these market pressures, luxury brands are undertaking strategic adjustments. LVMH has made creative leadership changes at Dior and Loewe, aiming to revitalize these brands. Kering, facing a 16% revenue decline in the first half of 2025, with Gucci sales plummeting by 26%, is also undergoing strategic reviews. Gucci's performance, in particular, has been impacted by a 42% drop in wholesale revenue and a 24% fall in sales through its directly operated retail network. The overall outlook for the luxury sector in 2025 remains cautious, with adaptability and innovation becoming paramount for brands seeking to navigate this challenging landscape.