The holiday season is looming, and luxury brands are under pressure to demonstrate a sustained recovery. A surge in luxury stocks has piled pressure on fashion houses like LVMH, Kering, and Richemont to show that third-quarter signs of recovery can translate into a sustained turnaround during the key holiday season. Kering's shares have soared around 49 percent in the last three months, while LVMH is up 42 percent, Moncler up 28 percent, and Richemont up 27 percent. However, despite some improvement in China, the key engine of growth, and buzzy design debuts from newly-appointed creative directors, risks remain for the fourth quarter. New styles won't hit the shops until next year, and the jury is still out on China's economic recovery. Spending in the United States, another key market, is also closely linked to a volatile stock market. All of this raises the stakes for the December holiday season, which accounts for as much as 30 percent of annual sales for some brands. With brands more confident about future US growth, many are expanding there. Hermès recently opened stores in Scottsdale, Arizona, and Nashville, Tennessee, and is planning more. LVMH’s Dior inaugurated its first US spa on New York’s Madison Avenue this summer, while Louis Vuitton’s Fifth Avenue flagship has been closed for an extensive refurbishment, with a lavish temporary store opened nearby. Luxury Parisian department store Printemps, which expanded to the US this year, has seen brisk business in Paris, thanks in part to US tourists. However, the latest US credit card data from Citi shows that spending on luxury brands fell 3 percent year-on-year in October, marking a retreat after three months of improvement, as a government shutdown contributed to consumer jitters. Among industry heavyweights, LVMH, Kering, and Richemont are most reliant on the US market, while Burberry, Hermès, Moncler, and Prada are less exposed, analysts say. Luxury houses are also banking on new creative direction to bring back shoppers turned off by high prices. Gucci, which has underperformed rivals in recent years, has tested styles from new creative director Demna even ahead of the designer’s first runway show expected in February. The strategy seems to be helping, with year-on-year spending at Gucci in the three months to early October showing its best performance versus peers since early 2022, according to Consumer Edge, which analyses US consumer credit and debit card data. However, the latest US credit card data from Citi shows that spending on luxury brands fell 3 percent year-on-year in October, marking a retreat after three months of improvement, as a government shutdown contributed to consumer jitters. By Mimosa Spencer
