Luxury brands seek runway boost as sector slowdown deepens in Milan and Paris

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Luxury brands runway boost

Highlights

Kering shares have erased all gains since CEO Luca de Meo's appointment, while LVMH is down 37% since the start of 2026 due to deepening luxury sector slowdown.
Consultancies like Bain report middle-class cutbacks on luxury purchases, increasing market polarisation as fewer than half of brands show growth and competition for wealthy clients intensifies.
Brands face pressure to justify up to 10 million euro runway show costs as consumer priorities shift toward wellness, health, and experiential spending over traditional luxury goods.

Fashion week spending test intensifies

As reported by Reuters, luxury executives and advisers say the sector slowdown is worsening as the war in the Middle East fuels inflation pressures and squeezes consumer budgets.

That comes as enthusiasm for high-end handbags is already fading, leaving investors more concerned about the industry's recovery prospects. Shares in Gucci owner Kering have erased the gains made when CEO Luca de Meo took the helm a year ago, while LVMH is down 37% since the start of 2026.

Diego della Valle, chairman of Tod's, says this year and next year will likely be a holding period while the market stabilises and becomes more predictable again. Brands are also under pressure to justify heavy spending on runway shows, which industry experts say can cost as much as 10 million euros to stage.

Polarisation grows across luxury market

Studies by Bain and other consultancies show middle-class shoppers are cutting back on luxury purchases, increasing competition for the wealthiest clients even as sales decline. Federico Bazzani, partner at Deloitte Advisory, says fewer than half of brands are growing while the rest are losing ground, forcing companies to choose between investing in innovation and customer experience or accepting lower margins through pricing changes.

Prada, which opens Milan Fashion Week with its catwalk show on Tuesday, recently revamped its Milan flagship store with private spaces for top spenders. David Watts, a luxury business adviser in London, says brands are reluctant to cut prices because that would undermine margins and signal previous overcharging, but they also do not want to reduce production because of the hit to revenue.

Industry leaders are also pointing to changing consumer priorities. Renzo Rosso, chairman of Diesel owner OTB, says shoppers are increasingly directing spending toward wellness, health, longevity, hotels and restaurants, rather than traditional luxury goods.

Gucci, Dolce & Gabbana and Giorgio Armani are showing new collections in Milan this week, while Dior and Louis Vuitton are among the most closely watched names at Paris Fashion Week, which starts on September 28. Chanel, which is outperforming rivals with designs by creative director Matthieu Blazy, is set to present its spring/summer 2027 collection on October 5.

Our earlier article on UK mortgage refinancing costs explained how higher borrowing costs linked to the Middle East conflict are hitting household budgets as fixed-rate deals roll off. We noted that many homeowners face sharply higher monthly payments, which risks weakening consumer demand as more income is diverted to housing costs.

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