The luxury goods sector is experiencing a champagne hangover. After years of insane growth in China, notably in 2022 and 2023, manufacturers of handbags, scarves and perfumes faced a drop in sales in the third quarter. China was once the Eldorado of Louis Vuitton, Gucci and Lancôme, but clearly, this is no longer the case. With the exception of Hermès, all luxury goods companies are struggling.

At LVMH, within the fashion and leather goods division, which includes Louis Vuitton, Dior and Celine, ready-to-wear and bag sales fell by 5% in three months, between July and the end of September, compared with the same period in 2023. Kering suffered a much steeper decline. The group owned by François Pinault's family lost 15% in quarterly sales, compared with the same period in 2023. Gucci, its biggest brand, is down 26%, after being in bad shape for several years. Saint Laurent, meanwhile, is down 13%. And the Chinese slowdown goes a long way to explaining these plunges.

The cosmetics market has not been spared. L'Oréal is struggling to sell its perfumes, skincare products and lipsticks, those little bits of luxury that some consumers treat themselves to when they can't afford a handbag deemed too expensive. The French giant's third-quarter sales in North Asia plummeted by 6.5% due to the economic situation in China, where sales trends have only worsened over the course of 2024: a slight increase in the first quarter, a fall in the second, and a plunge in the third.

Over this period, "the only segment to grow is mass-market products," said Nicolas Hieronimus, L'Oréal's CEO, probably because fans of high-end skincare and eye-shadow products such as Lancôme and Armani have switched their purchases to less expensive products from Maybelline or L'Oréal Paris. Its American rivals Coty and Estée Lauder are also struggling.

Eyewear manufacturers are also suffering from changing consumer behavior. In the third quarter of 2024, the French-Italian group EssilorLuxottica experienced a 4% drop in business. The Ray-Ban manufacturer's sales are decelerating in China.

Because Chinese shopping malls are emptying. Tourists from the mainland are still flocking to the island of Hainan, a duty-free territory taken over by Gucci, Cartier and Chanel, but few are buying. The conversion rate, the ratio between visits and purchases, is low in beauty stores "as in all other shops," reported Hieronimus on Tuesday, October 22. According to local authorities, during the week of October 1 – Golden Week, China's seven-day public holiday – sales fell by nearly 40% in Hainan.

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