European luxury is experiencing a turbulent start to the year on the stock market. Since January, the sector's leading stocks have recorded significant pullbacks. LVMH has shed approximately 26%, Richemont 17%, Kering 12% and Hermès nearly 22%. After several years of sustained growth, largely driven by the post-Covid rebound, investors are reducing their expectations. They are reducing their exposure to a sector they perceive as increasingly vulnerable to economic cycles.
A less favorable environment
Several factors explain this reversal. First, demand is falling in several key regions. Consumption of upmarket products is trending downward in the United States and China (-7% according to a Kearney study), two essential markets, bringing the post-pandemic momentum to an end.
Furthermore, the sector is heavily dependent on international tourist flows. Disruptions in travel and the global economic climate are leading to a decline in purchases at major luxury retailers.
Added to these factors is the conflict in the Middle East, which has plunged markets into a climate of uncertainty. As Bloomberg highlights, these tensions are weighing on growth prospects, denting purchasing power and weakening consumer confidence. These elements are decisive for discretionary spending -, and therefore for luxury.
The LVMH case
The situation of the Louis Vuitton owner is attracting particular attention. According to Bloomberg, the group is recording its worst start to a year since 1980. Over Q1, the 26% drop is greater than that of the 2008 crisis (-15%) and the 2020 pandemic (-18%).
This correction stems largely from vulnerabilities specific to the Parisian group. It is more exposed to a so-called "aspirational" clientele, who are more sensitive to variations in purchasing power. LVMH is also heavily present in wines and spirits, a segment that has struggled in recent years, primarily due to the slowdown in demand for cognac.
But beyond these factors, the luxury leader is often considered a bellwether for high-end consumption. Its fall therefore reflects a decline in overall investor confidence rather than a simple weakness within LVMH.
A sector affected as a whole
Indeed, all major European luxury stocks have been in the red since the beginning of the year. Richemont, which had nonetheless shown resilience in 2025 thanks to the success of Cartier jewelry, retreated by about 20% in the first quarter. Meanwhile, Hermès, the iconic house of Birkin bags, lost nearly a quarter of its value over the same period.
This global movement shows a shift in investor perception of the sector. Long considered defensive, luxury is now more exposed to economic cycles and uncertainties. Between the post-pandemic slowdown, trade tensions—notably related to US customs duties—and an unstable geopolitical environment, investors are becoming more cautious.
A temporary correction?
It remains to be seen whether this start to the year is a temporary adjustment or if a downward cycle is beginning.
On one hand, the sector's fundamentals remain very solid. According to a report by Bain & Company, the global luxury market is still worth nearly €1.44 trillion. Supported by a base of over 340 million consumers worldwide, the sector benefits from the increase in the wealthiest clients, who alone account for nearly 50% of sales.
On the other hand, the current context encourages caution. The economic slowdown and geopolitical uncertainties could weigh on luxury in the long term.
The first quarterly publications of 2026, expected in April, will be decisive in assessing the scale of this shock and the groups' ability to maintain their margins. The French luxury giants will report in quick succession in ten days. LVMH will publish its Q1 results on April 13, Kering on April 14, and Hermès on April 15.
