Educational research only — not investment advice.
European luxury stocks remain under pressure as weak Chinese demand challenges one of Europe’s most important industries.
LVMH, Kering and other major luxury groups spent years relying on Chinese consumers for growth.
Now that engine is much weaker.
The key question is:
Can luxury companies grow without a strong China recovery?
Why China Matters So Much
China became one of the most important markets for luxury handbags, watches, jewellery and fashion.
But weak consumer confidence and the long property downturn have reduced spending.
China’s retail sales rose only 0.4% year over year in August, while property investment remained deeply negative.
That matters because luxury spending is highly sensitive to wealth and confidence.
When property values and household confidence weaken, expensive discretionary purchases are easier to postpone.
Luxury Stocks Are Feeling the Pressure
Investors remain cautious.
The STOXX Europe Luxury 10 index was down around 19% year to date in early September.
LVMH shares have fallen even more sharply in 2026, while Kering, Hermès and other luxury names have also faced pressure.
The problem is no longer only China.
Bank of America recently found softer luxury demand across the U.S., Japan, South Korea and other Asian markets as well.
Fashion Looks Weaker Than Jewellery
One important trend is emerging inside the sector.
Fashion and leather goods are struggling more than jewellery.
Consumers have become more resistant to repeated price increases for handbags and clothing.
Bain estimates around 60 million consumers have moved away from luxury goods after years of price rises.
Jewellery has been much stronger.
Richemont, owner of Cartier and Van Cleef & Arpels, reported 20% sales growth in its latest quarter, while jewellery sales rose 24%.
That suggests customers may currently prefer products they see as more durable or valuable.
Can the U.S. Replace China?
Partially.
U.S. consumers have recently supported several luxury groups.
Kering returned to quarterly growth for the first time in roughly two years, with North America helping offset persistent weakness in China.
But relying too heavily on wealthy U.S. shoppers creates another risk.
Luxury demand is increasingly connected to stock-market and property wealth.
If financial markets weaken, spending by affluent consumers could also slow.
What Would a Real Recovery Look Like?
A stronger luxury recovery would probably need several things:
- improving Chinese consumer confidence
- stronger fashion sales
- fewer aggressive price increases
- continued U.S. demand
- better growth from younger consumers
Richemont shows that luxury demand has not disappeared.
But consumers are becoming much more selective.
What Should Investors Watch?
Watch China retail sales, LVMH and Kering fashion growth, Richemont jewellery sales, U.S. luxury spending and sector margins.
The central question is simple:
Can European luxury brands find new growth engines while China remains weak?
If China improves, the sector could regain an important source of demand.
If it does not, companies with stronger exposure to jewellery, wealthy U.S. consumers and resilient brands may continue to perform very differently from weaker fashion businesses.
Track Luxury Trends With TradingSimuLab
TradingSimuLab’s Trend Detector and Risk tools help users study changing sector momentum, market leadership and risk conditions.
For more quantitative market research and educational trading tools, sign up to TradingSimuLab.
TradingSimuLab is for educational and research purposes only and does not provide investment advice.