After a rocky two years, the luxury industry is expected to carry its third-quarter recovery into Q4, despite some tough comparables. Analysts predict that the upcoming round of fourth-quarter earnings will show modest growth broadly in line with Q3, buoyed by the consistent strength of the equity market in the US, signs of stabilization in China and early gains from luxury’s recalibration.
HSBC anticipates a 2.6% increase in global luxury sales in Q4 2025, after a 3.2% increase in Q3, a 0.8% decrease in Q2 and a 0.4% decline in Q1.
Due to the post-election shopping frenzy that unraveled in the US, comparisons to Q4 2024 are more challenging. “The key theme in Q4 2025 is ‘comping the comp’, as investors would put it,” Erwan Rambourg, HSBC global head of consumer and retail equity research, notes. “The comparison basis is more difficult, but I think most companies will not see a big deterioration of trends, despite the base being tougher.”
A two-year stacked analysis is particularly informative. “The investors believe that most of the group will post an improvement on the two-year stack basis, which has given some confidence that from an underlying standpoint, things are getting a little bit better for the sector,” says Morgan Stanley managing director Édouard Aubin.
Other analysts share similar expectations. “Although the recovery is still at an early stage, we believe that Q4 could act as the first proof point,” UBS managing director Zuzanna Pusz wrote in a note.
“With good feedback on Dior supporting LVMH, continuing strength in jewelry supporting Richemont, and with Hermès steady as it goes, I think the probability of a constructive scenario is more than 50%,” says Bernstein managing director Luca Solca.
Stabilization in China, acceleration in the US
The industry is seeing stabilization in China despite ongoing macroeconomic challenges, including weakness in the real estate market and high youth unemployment. Brands are doubling down on initiatives to create interest and traffic. Meanwhile, in the US, the strength of the stock market is boosting luxury demand. “Wealthy individuals in the US are probably feeling even wealthier now, it’s translating into more luxury purchases,” Rambourg notes.
Among the predictions for Q4, Europe and Southeast Asia are anticipated weak spots, due to low tourist spend, while in Japan, recent China-Japan tensions over Taiwan are likely to weigh on Chinese tourist arrivals, according to Rambourg. To wit, the negative impact from currency changes is going to be significant. A strong euro, versus the US dollar and the Chinese yuan, will weigh on European luxury firms, as overseas prices of Europe-made products rise.
All points to a growing focus on the local consumer. “Partly because of how the brands have evolved, partly because of currency fluctuations, the theme is selling to locals,” says Rambourg. “I don’t think there’s much hope that Chinese or aspirational American consumers will come back to Europe. Everywhere in the world, regional managers are focusing on what they can control: local consumers.”
Continued disparity between companies
On Monday, Brunello Cucinelli kicked off the earnings season, posting revenues up 11.9% year-on-year for Q4 2025. Cartier owner Richemont will follow on Thursday, with sales expected to rise 8.3%, after surging 14% in fiscal Q2.
LVMH, the bellwether of the sector, is expected to post a fourth-quarter sales decline of 0.2%, with its fashion and leather goods division down 2.9%, per HSBC estimates. The division’s sales fell 2% in Q3. According to HSBC estimates, Kering sales will fall 5.3%, versus a 5% drop in Q3, with Gucci sales declining 14% and Saint Laurent witnessing a 4.2% fall. Meanwhile, Bottega Veneta is expected to wave the flag for the group, with HSBC predicting a sales uplift of 2.5%; Kering’s Other Houses, which includes Balenciaga, McQueen and Boucheron, is heading for a 0.6% increase.