With profits plunging at LVMH and Kering in 2025 and Burberry recording a net loss for fiscal year 2024/25, the luxury sector is facing a clear turning point. Years of aggressive price hikes, mounting questions around product quality, and a sluggish Chinese market have combined to erode momentum across the industry.

"Coming out of the Covid-19 pandemic, the luxury sector was boosted by revenge buying," notes Eric Briones, co-founder of the Paris School of Luxury, who recently published a book on the sector’s transformation.

“When the luxury sector was confronted with surging demand, its artisanal model came under strain,” he says, pointing to the subcontracting scandals in Italy. For the past two years, Italian authorities have been investigating several major luxury brands over working conditions in supplier workshops allegedly linked to the exploitation of Chinese workers.

The surge in demand has also been accompanied by steep price increases, exceeding 50% over the past three years for some brands, “without any corresponding improvement in quality—and in some cases, with a decline in quality,” he emphasizes.

Rising prices have affected not only consumers’ willingness to pay but also sales volumes. “There is a fundamental dilemma,” says Christophe Caïs, head of luxury consultancy CXG. “How many bags can you sell worldwide before a brand becomes too ubiquitous? Luxury is built on exclusivity, yet growth requires volume. At what point does the pursuit of scale begin to undermine the very exclusivity that makes luxury desirable?”

According to consulting firm Bain & Company, the global luxury market lost 20 million customers between 2024 and 2025, adding to the 50 million consumers who had already exited in previous years.

After years of economic and geographic expansion, for large luxury groups that have built themselves up like conglomerates, the time for rationalization has come, experts emphasize.

“There is a phase of refocusing on portfolio coherence. Companies may choose to divest certain brands or seek better-aligned partners for those that are less consistent with the group’s DNA,” explains Léa Hubsch, a partner at consultancy Kearney.

Consolidations

Global luxury group LVMH has recently begun reshaping its portfolio, selling the American brand Marc Jacobs after three decades of ownership, as well as its [DFS (Duty Free Shops) b]usiness in China->https://www.premiumbeautynews.com/en/lvmh-sells-its-travel-retail,26942 in January. Meanwhile, Kering — currently in the midst of a major transformation — has also started to reposition itself, notably through the EUR 4 billion sale of its beauty division to L’Oréal.

"This trend toward consolidation is sure to continue, as conglomerates divest themselves of underperforming or less strategically important divisions to focus on their core businesses," analyzes the consulting firm CXG in a recent report.

Another example is Prada’s acquisition of its Italian rival Versace for EUR 1.25 billion in 2025. Further deals are expected, including around the Italian fashion house Giorgio Armani: in his will, the designer — who died last year — requested that his heirs sell the group in the medium term to a luxury major such as LVMH or L’Oréal.

Within companies, discipline is now the watchword. Luca de Meo, former Renault CEO appointed last year to lead Kering, stressed during the presentation of his strategy in April that excellence must come first, alongside a return to fundamentals, store closures, and a reduction in product ranges across certain brands.

More broadly, industry experts are pointing to the emergence of a new form of luxury, less focused on ostentatious goods and increasingly oriented toward the fast-growing wellness market.

“Desire is increasingly moving toward experiential luxury — beauty, hospitality, and transformative experiences,” notes Éric Briones. Many experts see the strongest growth ahead in wellness and longevity, with the emergence of clinic concepts designed to rival luxury hotels. Kering has already started to establish a foothold in this segment through a joint venture with L’Oréal announced a few months ago.