High-end brands have raised their prices in the post-pandemic economy. They’re selling less in part because fewer consumers can afford them.

Sales in the luxury sector are slowing as the economy cuts off less wealthy, more aspirational customers.

The softness seen this year is expected to persist, at least in the near term, at most of the high-end names, according to a client note from HSBC Global Investment Research. Cartier owner Richemont, where Q3 organic sales are expected to grow 13% year on year, is an outlier. Overall Q3 organic sales in the sector are expected to grow less than 3% year on year, compared to 7% growth the previous quarter. For the year, HSBC estimates the sector will grow 5%. Taking out Richemont and Swatch, that slows to 3.3%.

“Overall, while we became more cautious on the luxury sector at the beginning of September, we now expect Q3 to be even weaker than initially anticipated,” HSBC analysts led by Anne-Laure Bismuth said in their note.

They cite several reasons for this, starting with tough comparisons to the first half of the year but also including weak tourism in Europe and downbeat consumer sentiment.

The “feel-good factor of [the] consumer isn’t at its best, affecting the luxury sector,” they said.

However, after a post-pandemic boom, luxury has been slowly but steadily slumping for the last three years, according to research from Christopher O’Malley, portfolio manager, and Louise Singlehurst, research analyst, at Janus Henderson.

Consumers emerged from the pandemic flush with cash, thanks to the government stimulus and rising value in their assets.

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