Editor’s Note
This article examines the widespread downturn across the global luxury sector in 2024, highlighting significant financial losses and stock declines for major industry players.
In 2024, the global luxury goods industry experienced an unprecedented winter. Major luxury giants faced declining performance, plummeting stock prices, and significant wealth shrinkage. From LVMH and Kering to Hermès, Prada Group, Burberry, and L’Oréal, none were spared. According to the Bloomberg Billionaires Index, LVMH founder Bernard Arnault, L’Oréal heiress Françoise Bettencourt Meyers, and Kering founder François Pinault collectively lost approximately $70 billion in 2024. Weak luxury demand and turmoil in the French market made the companies controlled by these tycoons the main losers in the French stock market. Kering’s market value shrank by 41% to €29.13 billion. The post-pandemic consumption boom once propelled Bernard Arnault to the top of the global wealth rankings, but as luxury consumption in China cooled, his wealth shrank by $31 billion, dropping him to fifth place. François Pinault saw his wealth shrink by 64% from its 2021 peak to $22 billion due to weak performance at Kering’s flagship brand Gucci and ineffective management adjustments.
The decline in global luxury consumption stems primarily from macroeconomic uncertainty. Slowing global economic growth, frequent geopolitical conflicts, and the lingering effects of the COVID-19 pandemic have weakened consumer desire and significantly reduced willingness to purchase high-end luxury goods. According to a joint report by Bain & Company and the Italian luxury goods manufacturers’ association, the global personal luxury goods market is expected to decline by 2% to €363 billion in 2024. This trend is particularly evident in China, a crucial market for luxury consumption. Influenced by factors such as the downturn in the real estate market, policy adjustments, and changing consumer mindsets, the growth rate of luxury consumption in China has slowed sharply. According to LVMH’s financial report, in the first half of 2024, sales in the Asia-Pacific region (excluding Japan) fell by 16% year-on-year, with the Chinese market performing particularly weakly.
In 2024, a wave of global luxury brand acquisitions surged across apparel, jewelry, and beauty industries. These transactions reflect strategic adjustments among brands and reveal how luxury brands seek new growth points amid global economic uncertainty and how capital is allocated precisely where it matters.
In July 2024, Italian eyewear giant EssilorLuxottica acquired the renowned streetwear brand Supreme from VF Corporation for $1.5 billion. This deal marked EssilorLuxottica’s official entry into the streetwear fashion field and reflected the shrinking value of the Supreme brand. Since VF’s $2.1 billion acquisition of Supreme in 2020, the brand’s value has depreciated by $600 million in just four years. Analysts believe Supreme could expand its sales scale by selling eyewear products, while EssilorLuxottica supplemented its brand portfolio and broadened market coverage.
Almost simultaneously, LVMH announced it would indirectly increase its stake in Moncler by acquiring a 10% stake in Double R, a company controlled by Moncler CEO Remo Ruffini. This cooperation aims to consolidate Ruffini’s position as Moncler’s largest shareholder while achieving high complementarity in brand strategy and market expansion. Moncler, a dark horse in the luxury industry, saw revenue grow 8% to €1.23 billion in the first half of 2024, with gross margin rising to 76.7%. LVMH’s investment undoubtedly provides strong support for Moncler’s layout in the high-end outdoor sector.
LVMH also divested, announcing on September 30, 2024, the sale of its designer streetwear brand Off-White to brand management company Bluestar Alliance. Since its acquisition by LVMH in 2021, Off-White’s performance consistently fell short of expectations, especially after the death of founder Virgil Abloh, as the brand’s creative direction failed to resonate with core customers. This move shows luxury giants’ careful consideration in strategic adjustment, market layout, and risk response, freeing up resources to focus on brands with greater growth potential.
However, not all acquisition plans succeeded. The merger plan between Coach parent Tapestry and Michael Kors parent Capri Holdings ultimately failed. This merger between two American accessible luxury groups aimed to enhance competitiveness in the global luxury market by integrating brand resources and expanding market share. However, the deal faced an antitrust investigation by the U.S. Federal Trade Commission (FTC) over concerns it could suppress competition in the handbag market and harm consumers. The failure hit Capri Holdings particularly hard, with its stock price falling sharply after the announcement, while Tapestry’s stock price recovered somewhat after promptly announcing a share buyback plan.
Subsequently, year-end reports indicated Capri Holdings was considering selling its Jimmy Choo and Versace brands. Jimmy Choo, famous for its unique high-heel designs, is the group’s only brand achieving positive growth, though still affected by weak global luxury demand. Versace, known for its bold designs and luxurious fabrics, faces issues with insufficiently distinct brand image and product features. Capri hopes selling these two brands will free up more time and resources for Michael Kors’ transformation.
In the jewelry industry, Chinese private equity fund FountainVest Partners and Japanese fund Unison Capital jointly acquired Japanese high-end jewelry brand Tasaki for approximately ¥4.8 billion. This deal marks a significant turning point for Tasaki in the capital market and shows Chinese capital’s growing interest in the high-end jewelry market. Tasaki holds a place in the luxury market with its high-quality pearls and unique designs, and its future layout in the Chinese market will undoubtedly bring new growth points.
Under the dual influence of global economic fluctuations and changing consumer behavior, the high-end consumption market underwent unprecedented changes in 2024. According to the “2024 Global Luxury Market Study” jointly released by Bain & Company and the Italian luxury association Altagamma, the global luxury market is expected to experience a 2% decline in 2024. The report also indicates the luxury market lost approximately 50 million consumers over the past two years, partly because younger consumers are moving away from traditional luxury. However, with rising consumer purchasing power and evolving consumption concepts, new high-end consumption models are gradually forming, bringing unprecedented development opportunities for perfumes, jewelry, luxury eyewear, and high-end travel, while traditional hard luxury products like luxury watches face challenges.
Emotional consumption has become a new favorite in the high-end consumption market. With accelerating lifestyles and increasing work pressure, consumers increasingly seek emotional comfort and self-reward through luxury purchases. Products like perfumes and jewelry that provide pleasurable sensory experiences are thus highly favored. As a representative product of emotional consumption, the perfume market has shown strong growth momentum in recent years. According to QYR statistics and forecasts, global perfume market sales reached $43.42 billion in 2023 and are expected to reach $76.25 billion by 2030, with a compound annual growth rate (CAGR) of 8.5% (2024-2030). International beauty giants like L’Oréal and Estée Lauder have increased investment in the perfume sector, launching multiple high-end perfume products to meet market demand. Spanish beauty and fashion giant Puig Group reported in its Q1-Q3 2024 financial results that its perfume business segment revenue grew by 10.9%, becoming the main contributor to the group’s total revenue.
Jewelry and luxury eyewear, as important components of the traditional luxury sector, also benefit from the rise of emotional consumption. With increasing consumer demand for personalization and customization, high-end jewelry brands have launched limited-edition or holiday special products to attract consumers. For example, brands like Cartier and Van Cleef & Arpels have successfully attracted significant attention from high-end consumers by launching uniquely designed jewelry products. Driven by smart product consumption, the high-end eyewear market is also showing rapid growth. EssilorLuxottica Group successfully integrated streetwear elements into eyewear products by acquiring brands like Supreme, meeting young consumers’ demands for personalization and fashion. Simultaneously, with growing consumer emphasis on health and vision protection, the high-end eyewear market still holds huge growth potential.
Experiential consumption has become another important trend. Consumers are no longer satisfied with mere material purchases but place greater emphasis on the experience and feelings during consumption. Experiential consumption in cultural tourism, events, high-end hotels, private jets, and luxury yachts continues to grow. Luxury brands are entering the dining sector, with high-end hotels, luxury restaurants,精致咖啡厅, and chocolate dessert shops providing consumers with comprehensive luxury experiences. LVMH Group’s布局 in experiential consumption in 2024 has been particularly notable, with an increasing number of brand restaurants, cafes, and chocolate shops, from acquiring the historic Parisian restaurant Chez l’Ami Louis to cooperating with Accor Group to develop the Orient Express business, all demonstrating its emphasis on experiential consumption.