Even LV Is Closing Stores! Hermès Among 6 Luxury Groups Losing $280B as China’s Luxury Market Tanks

This is a first. Luxury brands that once seemed out of reach are quietly cutting prices. Gucci has led the way, breaking an industry pattern of steep price increases year after year. These are not small discounts of 10 or 20 percent. Some bags and clothes are down more than 40 percent. A new small tote bag is down 27 percent, and a classic bucket bag is down more than 40 percent. Clothing prices are generally down about 30 percent. The store closures are even more striking. Gucci has shut its flagship at Shanghai's IAPM Mall, a prime shopping location. It has closed six stores in China since 2023. Its parent company, Kering, closed a net 75 stores worldwide last year. Gucci accounted for 40 percent of those closures. The group plans to close another 100 stores this year. These luxury brands are changing course for a simple reason. Their products are getting harder to sell. One user commented, The economy is bad, and people have no money. They have also wised up. They are no longer paying, just to keep up appearances. A luxury resale vlogger said the market had changed. Louis Vuitton has already closed several stores this year. Gucci closing stores does not surprise me. But Louis Vuitton also closed its store in Guiyang, Guizhou. Its stores at Chengdu Tianfu Airport and Beijing Daxing Airport closed this year too. That shocked me. I used to have complete confidence in this brand. After all, I work for the company. But these closures are starting to scare me. With a market like this and resale prices where they are, I'm afraid to buy inventory. My confidence is shaken. I used to think every other brand could lose value, but Louis Vuitton would not. Now I don't know whether to buy or hold off. The market is so unstable. It's proved me wrong again and again. One user offered this advice. Find another line of work. Luxury cars, expensive homes, second-hand luxury goods, and other high-value consumer products have all struggled over the past two years. I see little reason to expect a recovery over the next few years. Europe's six largest luxury groups have lost about US$280 billion in combined market value this year. Weak spending by Chinese consumers continues to weigh on the industry. Stock market swings tied to artificial intelligence have also made consumers less willing to buy luxury goods. The Financial Times identified Europe's six largest publicly traded luxury groups as LVMH, Hermès, Gucci's parent company Kering, Richemont, Prada, and Montblanc. They've lost a combined $280.9 billion in market value this year. LVMH and Hermès suffered the biggest losses, at about $147 billion and $104 billion respectively. LVMH, Kering, and Hermès all reported a sharp deterioration in the Chinese market in their earnings releases this month. All three groups missed market expectations, even after those expectations had been cut significantly. The results reinforced concerns that the luxury industry remains stuck in a slump that has lasted for years. LVMH's earnings release on October 12 showed that weak spending in Greater China was the main reason it missed expectations. Third-quarter sales in Asia, excluding Japan, fell 5%. Resilient demand in the United States, Europe, and Japan partly offset the weakness in China. As the industry leader, LVMH's setback shows how difficult the recovery remains for the global luxury industry, which generates $350 billion in annual sales. Growth remains elusive after three years of slowing demand. LVMH Chief Financial Officer Cecile Cabannes, said broader economic conditions had sharply weakened Chinese consumer confidence, taking a heavy toll on non-essential spending. Caring's situation was worse. Its sales to Chinese consumers fell 15 to 20 percent in the third quarter. That followed a decline of about 15 percent in the previous quarter, showing that the downturn was deepening. Even Hermès, known for its firm pricing and resilience, is feeling the pressure from China. The company reported on October 22nd that third-quarter revenue rose 4.3 percent from a year earlier at constant exchange rates. That was its slowest growth since early 2020. Revenue was flat in the Asia-Pacific region, excluding Japan. Its chief financial officer said China was the company's single largest market and described conditions there as very difficult. Chinese demand luxury industry growth for more than a decade, but a prolonged property downturn and weak stock market performance have reduced domestic demand. Monthly retail sales growth in China averaged less than 0.5 percent over the past six months, a sharp slowdown from a year earlier. Bernstein analyst Luca Solca said the hoped-for recovery in Chinese luxury spending has stalled, hurting corporate results and weighing on share prices. The pressure in mainland China extends beyond those luxury brands. The market for high-end and ultra-luxury watches has been hit even harder. A vlogger who just entered the luxury resale business wrote Here's an industry that everyone thinks delivers huge profits, but really does not. I used to think the same thing. I thought selling second-hand luxury goods was incredibly profitable. I was looking for something to do, and a woman from my hometown happened to be the founder of a leading luxury resale brand in Shanghai. I went to talk with her about working together. She thought my appearance and the way I carried myself suited the business. Most of all, she valued my ability to create social media content and run accounts. The vlogger said the owner offered her the highest commission rates in the industry. She also wanted her to lead online operations for a new store covering nearly 10,800 square feet. At first, she was excited and thought that she would soon make a fortune. The reality was very different. A friend bought a watch through her for 500,000 yuan, about 70,000 USD. The dealer's gross profit was less than 4,000 yuan, and her commission was just over 1,000 yuan. After spending more than 2,000 yuan taking her friend out to eat, she lost nearly 1,000. She also bought herself a watch for her birthday for more than 300,000 yuan. The owner showed her the internal sales records. The profit was just 3,000 yuan. She had expected these big transactions to generate tens of thousands of yuan in profit. Instead, the margins were surprisingly thin. As she earned more, she found that average net profit margins in luxury resale were only 5-10%, much like those in ordinary brick-and-mortar businesses. Industry margins had reached 30% around 2020, but were now down to about 10%. With the economy slowing and consumers trading down, shoppers were holding on to their money. The enthusiasm for luxury goods has clearly faded. Prices were also easy to check across major platforms. Buyers could compare offers freely, leaving sellers little room to profit from knowing more than their customers. An even bigger problem is the amount of cash tied up in inventory. Bags and watches worth more than 1 million yuan can sit in storage. Seasonal editions and niche models that don't sell can become inventory the dealer is stuck with indefinitely. Weak demand means goods take longer to sell. Dealers then undercut one another, creating a downward spiral. After this year's Louis Vuitton controversy, some dealers were selling popular items for less than they had paid to acquire them. The return on all that work was also disappointing. The owner's top salesperson had nearly 10 years of experience and tens of thousands of followers. She worked long days buying bags and watches, filming videos, and managing social media accounts. Even then, she earned 100,000 yuan a month, about US$14,000. Seeing the effort involved and the income it produced, the vlogger turned down the opportunity, even though she would not have had to invest any money. In her view, the luxury industry is going through an adjustment. Compliance and operating costs have risen sharply, forcing smaller businesses out faster. Their gains are concentrated among the top 20%, or even the top 10%. There is little new growth to share, and most of it goes to leading companies and establish stores with loyal customers. Most people in the business are struggling to make a living. The vlogger concluded that the luxury spending boom was over. Luxury resale had long since stopped being a business with huge margins. As consumers become more practical, she said, the idea that traditional businesses can easily deliver enormous profits has run its course. A well-known platform specializing in ultra-luxury watches is Hangzhou Junyuehui Watch Company. Its services include evaluating, buying, consigning, and selling second-hand luxury goods and rare high-end pieces. A company executive posted a video on a Chinese social media platform. Junyuehui is heading towards closure. After two months of turmoil, things may look hopeful on the surface, but we have never really recovered. Pay for our more than 100 employees has dropped sharply. The company's performance keeps falling, and we cannot sell our watches. We have more than 400 million yuan tied in inventory. The market has been bad for the past two months, with prices down more than 10%. Our inventory alone has lost 40 million yuan in value. We fully resumed operations last month, but business has remained slow. The public reaction to these events has had a very big impact on our company. Around September 2026, rumors spread widely online and on short video platforms that Junior Hui's head had been arrested and the company had closed. Its network of popular accounts temporarily showed unusual activity or stopped posting, alarming followers and customers. Company representatives later addressed the rumors in videos. They acknowledged a small disturbance but said it had been fully resolved. They said the experience had made them rethink the luxury resale business model under current economic conditions. Junyuehui markets itself as a platform for rare high-end goods and says it sells nothing below 200,000 yuan. It became popular online with slogans such as, a watch does not elevate its owner, the owner elevates the watch. But its aggressive promotion and business model have also drawn criticism. The resale market for watches from brands such as Rolex, Audemars Piguet, and Patek Philippe has long faced opaque pricing, requirements to buy other watches to obtain a sought-after model, and inflated resale prices. Junyuehui's displays of popular watches at extremely high prices have led some traditional watch enthusiasts to accuse it of fueling speculation and encouraging the exploitation of buyers. Many users were skeptical of its promises to pay exceptionally high prices for watches. Consumers on various forums said platforms like these often offered very high estimates online to draw customers into stores. During inspection, they then lowered their offers, citing the item's condition or minor flaws. Consumers describe this as a common form of psychological pressure in an industry with little pricing transparency. The vlogger concluded, I worked in an office building for two years, then moved into this small villa beside Westlake. It has been almost two years here now. Over the past five or six years, we've had some success in this industry. But with future policies and compliance requirements, it feels so hard to keep going. I need advice on what to do next. I need to think seriously about whether the industry needs Junyuehui, or a company that brings together ultra-luxury products priced from 300,000 to 10 million yuan in one store. I need to consider what value Junyuehui actually provides. If I invest so much in this business only to make a tiny profit, or even lose money, that falls far short of what I expect. Many users also weighed in on the sharp downturn in mainland China's luxury market and the setbacks facing major international luxury groups. Big purchases such as homes and cars are falling, and interest rates are dropping too. Cash flow becomes more valuable. Hold on to it. The more cash you have, the more choices you have. A vlogger said luxury goods commanded a premium because less wealthy people admired them. In a video, she said, I was almost 30 when I realized that not having a designer bag can sometimes make a woman feel awkward. I never used to care. I thought a lot of designer bags were ugly. Honestly, I still do. I cannot understand spending tens of thousands of yuan on something ugly. Things changed in late 2024, when a well-known resale platform approached her about promoting its luxury resale business. They had agreed on the fee and schedule. Then, the company asked whether she owned a Louis Vuitton, Coach, or Dior bag. She repeatedly said no. The company kept asking, and even sent her a spreadsheet listing more than 70 bags, asking her to check each one. She made it clear that she never bought designer bags. The deal fell through, costing her the income. She said the questions were not offensive, but for the first time, she felt a subtle sense of rejection, just because she lacked a certain accessory. She began searching online for classic designer bags and their prices. Looking back, she found the process frightening. After seeing so many polished images of stylish women carrying designer bags, she gradually began to find the bags attractive. She realized she was transferring the sophistication of the images onto the bags themselves. It reminded her of studying modern and contemporary literature for graduate entrance exams. She had not liked many of the novels, but after reading teachers' analyses, she forced herself to accept their value. Shopping for bags involved the same mindset and preparing for exams. It felt like an active choice, but she was really adopting someone else's taste. When she searched for the monthly salary needed to afford a designer bag, she found a clear social hierarchy. Commenter said, Buy it if you like it, while mocking buyers of entry-level brands as poor people pretending to be rich. They urged them to stretch their budgets for something better. But there was always a more expensive choice, from thousands of yuan to tens of thousands, then well over 100,000 yuan. The judgment stopped only when someone could prove they came from old money. In this view, there were only two categories, the rich and those pretending to be rich. The luxury purchase added nothing to the buyer's worth. She said the central purpose of luxury goods was to separate social classes. Membership rules, requirements to buy other products first, and proof-of-funds checks kept ordinary consumers out. Their admiration then reinforced the status of the wealthy. In other words, that admiration created the luxury premium. But when a brand passed its peak and began to decline, it became more approachable. It shifted from attracting attention to directly pursuing sales. Once distant sales associates began welcoming everyone warmly, marketing messages changed to lines such as, vote for the life you want. Yet when too many ordinary consumers owned luxury goods, those goods lost their ability to set owners apart. The status attached to the label quickly faded. Only two groups could come through the system unscathed, those who never fell for the prestige and those who kept defining new trends before moving on to the next market. The trendsetters decided what counted as tasteful and sophisticated. They created desire among ordinary consumers. Then they recast the process of profiting from those consumers as a story about buyers being vain or spending beyond their means. Ordinary buyers were left with the ridicule and the losses. She stressed that she was not against all luxury goods. She simply did not want to buy a bag to earn respect or avoid being looked down on. Her message to women her age was that luxury spending could cost far more than the confidence it delivered. Maintaining that fragile confidence required still more spending. Real confidence might come from money saved instead. Money was still hard to earn and easy to lose. She urged them not to end up with purchases that offered little lasting value. Analysts said China's politically connected elite were concealing wealth through what they called a sinking ship plan. While the rich were emigrating, the middle class was cutting spending, and those at the bottom were struggling to survive. They said China no longer had the purchasing power to sustain luxury spending. In their view, this was the fundamental reason the boom was ending for luxury brands that had profited heavily from Chinese consumers.