Luxury Unfiltered: Why some brands will soar while others sink in luxury’s make or break moment

LVMH, the largest luxury conglomerate, reported a decline of 4 percent, with a 9 percent dip in its fashion and leather goods division. Kering saw its revenue plummet by 18 percent, with Gucci continuing its freefall, down 25 percent, and many of its smaller brands in decline. Richemont’s growth was a modest 1 percent at current exchange rates, driven mostly by jewelry, up 4 percent, while its watch division saw a significant 13 percent decline.

Hermès, however, stood out with significant growth of 9 percent, showing once again that excellence and consistency in brand execution can still yield impressive results even in uncertain times. What is telling is a dramatic gap between the 9 percent jump of Hermès and, on the other end, the massive decline of 18 percent at Kering. The most telling aspect of today’s luxury landscape is the widening gap between winners and those brands that are in decline. This is what makes this moment so different from past periods of volatility.

Some brands grow strongly, inspire and build trust. Others are losing relevance with shocking speed. In almost every case, the difference lies in three factors: brand storytelling, client inspiration and the ability to build trust over time. This underlines: don’t point to the market as a predictor of success.

The market performance is just an aggregate of individual brand performances, and they could not be more divisive. The root cause: Today’s luxury market is no longer driven by product alone. It is powered by emotion, client connection and meaning. Brands that know how to deliver a compelling story are growing.

Those who do not are paying the price by declining in revenues and, importantly, gross margins. Gucci is perhaps the most dramatic example. For more than two years now, the brand has reported quarter after quarter, dramatically declining revenues. This would be concerning in any situation, but what is striking is that the numbers keep worsening, even against incredibly weak comparables. In my entire career, I have never seen such a decline. Gucci is a brand in free fall with no end in sight. Addressing the brand crisis head-on will be the main task for the incoming Kering CEO, Luca de Meo, in a group where many brands are in disarray.

Gucci’s collapse was entirely homemade, with a leadership shift that pursued a brand reset that will likely be remembered as the worst luxury brand reset of all time. When Alessandro Michele exited as creative director, the brand also walked away from the bold, eccentric, unapologetic identity that had made it the fastest-growing luxury brand of its time. What followed was a muted, safer, more conventional Gucci. But safe and conventional in luxury is a dangerous combination. The brand’s unique voice was replaced with ambiguity. As a result, many clients disconnected and lost trust in the brand. Internally, the shift led to the departure of key management talent. Externally, the brand lost its power and alienated loyal fans. Contrast this with Hermès.

The brand’s enduring strength shows that how a brand is managed is more relevant than external market factors. Hermès has become a role model of consistency, trust, and strategic discipline. The brand’s success is built on its refusal to dilute its brand story. It creates a strong desire through timelessness, strict quality focus that is not just lip service, selective scarcity and a clear emotional story that resonates deeply with clients. In a market filled with imitation, noise and volatility, Hermès offers stability and inspiration, a rare combination that translates directly into financial performance. This is the real story of today’s luxury sector. It is not a cyclical downturn. It’s instead a recalibration phase and a wake-up call. Client expectations are shifting rapidly, and many brands struggle to keep pace.

Many of the current challenges are homemade. Brands have alienated clients by raising prices in an unprecedented fashion without increasing value. They have lost trust through damaging supply chain revelations, as seen with Dior, Armani and, most recently, Loro Piana in Italy. Some have made reputational mistakes that are hard to recover from, like Balenciaga’s advertising scandal, which still casts a dark shadow over the brand.

The challenge in today’s social media-driven world is that even supply chain issues, which in the past may have been buried on page 25 in a financial newspaper, now become TikTok stories that go viral. I saw hundreds of posts with headlines like “If I can’t trust Loro Piana, then which brand can I trust?” Once trust is broken, it’s very challenging to regain. Meanwhile, the next generation of luxury clients is stepping in. Gen Z is unlike any before.

They are social media natives, shaped by uniquely public and hyper-connected lives. But what many luxury leaders fail to see is that Gen Z does not just want virtual flash. They seek human connections and access. They expect empathy, relevance and extraordinary experiences in every touchpoint. They want brands to understand who they are, not just what they can buy. This generational shift raises the bar for everyone. It means that luxury must go deeper. Stories must resonate emotionally. Experiences must be transformative. Leadership must be bold and visionary. Clients need to be at the center, beyond just ambitious words.

The luxury sector is not in a structural decline. It is in a crisis of brands not delivering the value clients expect. Hence, it’s a transition where many brands will be left behind, but where those who act now have a chance to win big. Importantly, those who resist this truth will find themselves increasingly irrelevant. The call to action is clear. It is time for brands to stop blaming external conditions – I honestly can’t hear anymore the excuse of softening demand – and start auditing their relevance. Are you truly inspiring your clients?

 Is your brand story resonating across every touchpoint? Are your people empowered to deliver extraordinary human moments? The real question is: are you ready for the future of luxury?

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