Over the past three years, the luxury retail sector has experienced a steady decline following a brief post-pandemic boom.

Most of luxury’s biggest players, save for Richemont, are reporting lower-than-ever sales figures.

Since January, share prices of LVMH, Hermès and Kering have fallen 40 per cent, 39 per cent and 30 per cent, respectively, while Richemont remains roughly flat.

Based on the Q3 performance of eight key luxury companies (Burberry, Hermès, Kering, LVMH, Moncler, Prada, Richemont and the Swatch Group), HSBC Global Investment Research expects luxury retail growth to slow to 2.7 per cent, down from seven per cent in Q2.

Anne-Laure Bismuth, HSBC’s head of luxury and sporting goods, said, “We had turned more cautious on the sector in early September, because of all the news about the situation in China deteriorating and the tough comparison basis in the US. During our pre-close discussions with the companies, we realised that conditions were worse than we had initially anticipated, prompting us to lower our estimates across the board, with Richemont being the sole exception.”

HSBC predicts that Richemont’s Q3 organic sales will grow 13 per cent year on year.

Broader socioeconomic factors have contributed to luxury retail’s decline. The Middle East conflict, for example, has affected tourism sales and increased shipping costs. But retail experts and strategists point to a larger problem.

Simply put, luxury purchases no longer have a real “feel-good” quality, especially for aspirational shoppers.

Neil Saunders, managing director at GlobalData, told Inside Retail that several factors are contributing to luxury’s weakness.

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