Global luxury is cracking at the seams: stocks are soaring, but China is silent, America is saving, and the December season may bring the industry down. Eastern Post explains why LVMH, Gucci, and Kering are balancing on the edge today.

The shares of the world’s fashion houses are rising as if the world is once again living in an era of cheap credit and easy wealth.
LVMH has jumped by almost half, Kering — even higher, Moncler and Richemont have rushed after them. The stock market behaves as if luxury is returning to the previous decade, when Americans and the Chinese competed over who would buy more bags, watches and lipsticks across Europe. But behind this shine lies a silence that the fashion houses are trying to shout down.

China has not given the explosion the industry has hoped for during two years.
The economy is wounded, demand is cautious, the buyer is silent. America is nervous: shutdown, a jumping stock market, an increase of interest rates. This is the meaning of the phrase “money is heavier”: a person must think before spending. Not because the money has disappeared — but because every purchase is now mentally weighed. When credit is expensive and the future is foggy, even a wealthy client begins to count instead of throwing money into the till.

According to Citi, Americans’ spending on luxury has already fallen by 3%.
Formally this is a trifle. In fact — an alarming bell. Luxury always reacts first. When people begin to save, they do not give up bread and heating — they give up the sixth bag and the third watch. A decline of several percent is a signal that the client has begun to close the wallet. In luxury this means one thing: problems are at the doorstep.

Meanwhile, the industry is hoping for December — the month that decides the fate of the year. For many brands it is a third of annual sales. If the American this December will be looking not at the shop windows, but at his bank account, the entire stock-market celebration will end faster than it began. Investors like the growth of quotations, but quotations are hopes, while sales are reality. And reality now is not keeping up with the stock market.

Brands are trying to revive the buyer.

Gucci is flooding stores with new Demna silhouettes even before the show.
Louis Vuitton is selling a lipstick for 160 dollars — twice as expensive as Chanel, three times more expensive than Hermès. This is not about lipstick. This is about an attempt to lure the client into the store at any cost. If he has come for “the most expensive lipstick in the world,” the salesperson will always offer him a bag or a belt. But this is a game of brightness, not a solution to the problem. Because the problem is not in the things. The problem is in the buyer who has become more cautious.

And the most important thing: the luxury market lives not on desires, but on the surplus of money. As long as the wealthy class has a feeling of lightness — the market grows. As soon as this feeling disappears, the purchase disappears as well. Today the world is exactly at this point. Credit is more expensive, uncertainty is higher, China is quieter, America is slower. And no designer novelty can change the fact that the buyer has begun to count and is choosing less.

The paradox is that the stock market celebrates while the industry itself is standing on its nerves. It grows on expectation, but works in reality. And if December turns out weak — all these plus forty percent on charts will crumble faster than a new shop window is arranged on Fifth Avenue.

Luxury is the first sector that loses its breath when the economy begins to contract.

And this is exactly what is happening now.