Jewelry shines as luxury sector finds its spark in q2

The luxury sector in Q2 2026 maintained a steady yet modest growth trajectory, with forecasts hovering between 4.3% and 4.7%, mirroring the stability seen in Q1 without significant acceleration. This plateaued growth masks notable regional disparities: the US and South Korea continue to buoy the market thanks to robust wealth effects and tech industry bonuses, while China and the Middle East grapple with slower demand amid market stabilization and ongoing geopolitical tensions.

Within this cautious recovery landscape, LVMH’s fashion and leather goods division emerges as a pivotal indicator; achieving at least 1% organic growth in Q2 would mark a crucial turning point after seven consecutive quarters of decline, signaling renewed consumer confidence in these core luxury categories. Meanwhile, the luxury jewelry segment, spearheaded by Richemont and Kering, stands out as a resilient growth engine, offering a safe haven amid broader market fluctuations and underscoring the segment’s enduring appeal and stability.

By mid-2026, the US market emerged as a powerhouse for luxury consumption, buoyed by wealth effects and tech sector bonuses, with brands like Cartier, LVMH, Hermès, Prada, and Ferragamo reporting robust sales growth—Ferragamo alone saw a 13% increase in North America during Q2. Similarly, Japan and South Korea demonstrated strong demand, contributing to regional growth and helping offset weaker performances elsewhere. This dynamic underscores a clear regional bifurcation where North America and select Asian markets are driving recovery and expansion in luxury retail.

In stark contrast, Europe, the Middle East, China, and parts of Asia-Pacific continue to wrestle with significant headwinds stemming from geopolitical tensions and economic uncertainties. The Middle East experienced a steep 24% decline in luxury sales, while Europe saw a more modest 4% drop, reflecting the broader impact of regional conflicts and market stabilization efforts in China. Despite challenges such as currency headwinds and ongoing uncertainty, companies like Hermès have maintained resilience, reaffirming growth guidance amid these uneven conditions.

This regional disparity is further complicated by segment-specific trends, with jewelry emerging as a critical growth driver particularly in the US, helping to flatten and even lift luxury sales in an otherwise uneven recovery landscape. While Japan and the US show strong demand across multiple luxury categories, other regions lag behind, highlighting the sector’s ongoing challenge to balance growth amid geopolitical and economic headwinds that vary widely by geography.

Jewelry continues to be the standout growth engine within the luxury sector, outperforming other segments such as ready-to-wear and handbags. Major players like Richemont, Kering, and LVMH have reported double-digit sales increases in their jewelry divisions—24% at Richemont’s maisons, 18% at Kering’s jewelry arm, and 11% at LVMH’s watches and jewelry segment—underscoring jewelry’s role as both a growth driver and a safe haven amid broader market volatility. This momentum is particularly fueled by strong demand in the United States, which alongside Japan, remains a robust market for luxury brands, suggesting sustained luxury consumption into the latter half of 2026.

Within the fashion and leather goods category, performance is more nuanced, with LVMH’s division serving as a critical barometer for sector recovery. After seven quarters of decline, a modest 1% or higher organic growth in Q2 signals a potential turnaround. Hermès exemplifies strength here, posting a 6.7% sales increase driven by a 10.2% surge in leather goods and saddlery, while maintaining a robust 41% operating margin despite currency headwinds. Meanwhile, Kering’s flagship brand Gucci showed an easing sales decline to just 2% in Q2, outperforming expectations and benefiting from a turnaround strategy focused on store closures and retail productivity improvements. Other Kering brands like Bottega Veneta and Saint Laurent also improved, though Balenciaga continues to face challenges.

Prada Group’s growth story in Q2 2026 was led decisively by the Prada brand itself, which outpaced Miu Miu with a 6.3% increase in retail sales supported by new client acquisition and higher average prices. Miu Miu’s growth remained modest and normalized at around 2.5%. Versace maintained steady performance with €350 million in net revenue and is undergoing a creative repositioning under new creative director Pieter Mulier, signaling strategic efforts to reinvigorate brand appeal. Similarly, Ferragamo posted a solid 4.6% revenue growth driven by strong direct-to-consumer sales and a 5.1% increase in footwear, its strongest segment, while leather goods declined slightly. North America emerged as a key growth region for Ferragamo with a 13% sales increase, highlighting the region’s importance across multiple luxury brands.

Lanvin Group’s H1 2026 results reflect the challenges of strategic retail footprint optimization and brand transformation, with a 13% revenue decline offset by improved gross profit margins and operational efficiencies. Individual brand performances varied significantly—Lanvin fell 17.9%, Wolford and St. John showed resilience with margin expansions and e-commerce growth, while Sergio Rossi began building wholesale momentum. The group’s disciplined cost management led to a marked reduction in losses and improved EBITDA margins, setting the stage for a focused H2 strategy centered on creative leadership, channel mix refinement, and selective investment to reignite brand desirability and consumer engagement.

Luxury groups like Kering and Lanvin are strategically balancing growth with caution by optimizing their retail footprints and refining portfolio focus. Kering’s turnaround plan includes selective store closures and a focus on improving retail productivity, while Lanvin Group has reduced its directly operated stores to 151 and is sharpening its channel mix to reignite brand desirability. This selective portfolio management is evident as Kering’s brands such as Bottega Veneta and Saint Laurent show improvement, contrasting with challenges faced by Balenciaga, underscoring a targeted approach to brand investment and divestment.

Investment in creative renewal and marketing remains a cornerstone for driving growth amid cautious operational adjustments. Kering is banking on new Gucci collections and campaigns to fuel full-year growth, while Lanvin Group is activating new creative and commercial leadership to bring compelling collections to market. This creative focus is complemented by Hermès’ emphasis on high-performing segments like leather goods and textiles, which saw double-digit growth, even as it manages weaker categories such as perfume and beauty.

Cost discipline and channel optimization are central to sustaining resilience in a complex environment. Hermès maintains a robust 41% operating margin and reaffirms its 7.1% full-year growth guidance despite currency headwinds and geopolitical uncertainties, demonstrating disciplined cost management. Similarly, Ferragamo is strengthening its organization amid leadership changes while driving strong direct-to-consumer growth, signaling a strategic shift away from flat wholesale channels. Lanvin’s improved gross profit margin, up 1.29 percentage points year-on-year, reflects operational efficiencies and effective product lifecycle management across its brands.

By mid-2026, consumer preferences in the luxury sector have notably shifted towards jewelry, with Richemont’s maisons seeing a 24% rise in jewelry sales and LVMH’s watches and jewelry division growing 11%. This pivot away from ready-to-wear and handbags underscores a broader trend where wealthier clientele, particularly Americans and South Koreans, are driving growth, while middle-class consumers and other nationalities exhibit flat or declining spending. Meanwhile, the sector remains cautious about China’s recovery, as spending from Chinese nationals has only marginally improved compared to their pre-pandemic dominance, with Hermès’ Axel Dumas noting the economy has yet to regain its former momentum.

Despite these challenges, luxury companies maintain a cautiously optimistic outlook for the remainder of 2026, buoyed by stable or improving demand in key markets such as the US, South Korea, and the Middle East. LVMH’s CFO Cécile Cabanis highlights a gradual improvement in the Middle East offsetting other weaknesses, while Morgan Stanley’s Édouard Aubin points to South Korea’s tech-driven wealth creation as a significant growth driver. There is also a tentative bullish case for China contingent on a potential tech-led stock market rally, though this remains uncertain.

The Lanvin Group exemplifies the luxury sector’s strategic response to shifting consumer behavior, reporting a €101 million revenue in H1 2026 despite a 13% year-on-year decline, driven by a focused brand transformation and retail footprint optimization that reduced stores to 151 directly operated locations. Their return to e-commerce growth and an expanded gross profit margin of 59% reflect a successful pivot towards higher-value consumer segments. Enhanced sell-through rates, improved product lifecycle management, and efficiency programs have bolstered profitability, signaling a disciplined approach aligned with premium and luxury market demands.

Looking ahead, Lanvin’s leadership remains cautiously optimistic, emphasizing the activation of new creative and commercial strategies to sharpen channel mix and reignite brand desirability. Executive President Andy Lew underscores this strategic pivot as essential to engaging wealthier clientele and navigating the broader market recovery challenges, illustrating how luxury brands are recalibrating their offerings and consumer engagement to thrive amid evolving market dynamics.