With the recent surge in luxury stocks, pressure is mounting on French sector giants LVMH and Kering, owner of Gucci, to prove that the signs of recovery seen in the third quarter can translate into a sustained rebound during the holiday season--a crucial period for the industry.

Kering, parent company of Gucci, has seen its shares climb approximately 49% over the past three months, while LVMH, owner of Louis Vuitton and Dior, is up 42%. Italian group Moncler and Swiss group Richemont have also seen their shares rise by 28% and 27%, respectively.

These rallies are partly linked to the general upward momentum in equity markets. But they are also fueled by investor hopes that the luxury industry, which has endured a two-year crisis, is on the verge of recovery.

Financial results released by the groups for the third quarter showed some improvement in China--once their main growth engine--and the high-profile debuts of new artistic directors at several brands have further fueled optimism.

RISKS FOR THE FOURTH QUARTER

However, the new collections will not appear in stores until next year, and the economic recovery in China remains uncertain. In the United States, another key market, consumer spending remains closely tied to stock market volatility.

According to Vincent Redrado, founder of the consumer goods consultancy Digital Native Group, the holiday season accounts for up to 30% of annual revenue for certain brands.

"I think there is a risk for the fourth quarter," notes Olivier Abtan, a partner specializing in retail and consumer goods at consultancy AlixPartners. "In China, things are rather flat, there is no positive momentum, and in the United States, consumption rebounded last year" after Donald Trump's election, making year-on-year comparisons difficult, he adds.

The prolonged slowdown in China has hurt brands with significant exposure to the country, such as Burberry and Gucci, prompting major management shakeups.

In October, LVMH's Chief Financial Officer Cécile Cabanis told investors that the situation had become "positive" in mainland China for the industry leader, while warning that the last quarter of 2025 would be "more challenging."

HIGH-END BRANDS TARGET AMERICA

More confident in future U.S. growth, many brands are choosing to expand their operations there.

Hermès recently opened stores in Scottsdale, Arizona, and Nashville, Tennessee, with plans for further expansion.

At LVMH, Dior launched its first American spa this summer on Madison Avenue in New York, while the flagship Louis Vuitton store on Fifth Avenue was closed for a full renovation--temporarily replaced by a massive pop-up store nearby.

Parisian luxury department store Printemps, which opened a location in New York this year, has seen strong activity in Paris, partly thanks to American tourists.

"We have recorded double-digit growth rates since the summer" with certain international shoppers, notably from the United States and Gulf countries, said Laetitia Henry, managing director of Printemps Haussmann.

"The American clientele has strong purchasing power," she observes.

However, the latest Citi credit card data in the U.S. shows that spending on luxury brands fell by 3% year-on-year in October, marking a decline after three months of improvement, as the prolonged partial shutdown of federal agencies fueled consumer anxiety.

Among industry heavyweights, LVMH, Zegna, Kering, and Richemont are the most dependent on the U.S. market, while Burberry, Hermès, Moncler, and Prada are less exposed, according to some analysts.

NEW COLLECTIONS UNDER PRESSURE

Luxury houses are also banking on new creative directions to win back buyers put off by high prices.

Gucci, which has underperformed its rivals in recent years, has tested designs from its new creative director, Demna, in select stores even before his first runway show scheduled for February.

This strategy appears to be paying off, as year-on-year spending at Gucci in the three months leading up to October saw its best performance relative to peers since early 2022, according to Consumer Edge, which analyzes U.S. consumer credit and debit card data.

"There was a fairly significant sequential improvement," notes Michael Gunther of Consumer Edge.

Louis Vuitton, meanwhile, generated buzz at the end of August by launching new refillable makeup products, including a $160 lipstick--far more expensive than Hermès or Chanel, whose lipsticks cost just over $80 and $50, respectively.

"The fact that it's the most expensive lipstick on the planet doesn't really matter," notes Erwan Rambourg, analyst at HSBC.

"What matters is that it draws people in. If you're shocked by the price, it's up to the salesperson to say: 'Okay, you're not interested in the lipstick. Why not take a look at these sneakers or this small leather good?'"

(Reporting by Mimosa Spencer, French version by Florence Loève, edited by Blandine Hénault)

By Mimosa Spencer