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Markets EdgeJOHNNIE BLUENovember 15, 20262 min readAd-free
LVMH, Kering, Richemont Redirect $2.3B Capital to US Retail as China Luxury Spending Contracts 18%
European luxury conglomerates abandon five-year China thesis, accelerate US store openings as sector indices fall to 2020 levels.
Markets Edge deskMarkets Edge · Huang GoodmanSource: Financial Times ↗
In plain words
European luxury redirects **$2.3B** to US expansion as China sales fall **18%**; sector indices at four-year lows.
$2.3 billion
toward US retail expansion over the next eighteen months
18%
year-over-year in Q4 2024
47 new North American locations
by mid-2026
22 standalone stores
scheduled before year-end
LVMH, Hermès, Kering, and Richemont have collectively allocated $2.3 billion toward US retail expansion over the next eighteen months, marking the sharpest geographic reallocation in luxury capital since the 2008 financial crisis. The pivot follows three consecutive quarters of declining Chinese luxury consumption, which fell 18% year-over-year in Q4 2024, and pushed the European luxury index to its lowest valuation since March 2020.
LVMH disclosed plans to open 47 new North American locations by mid-2026, concentrated in secondary markets including Austin, Nashville, and Miami suburbs. Kering is accelerating US distribution for Gucci and Bottega Veneta, with 22 standalone stores scheduled before year-end. Richemont confirmed $780 million in US real estate commitments, primarily for Cartier and Van Cleef & Arpels flagships in Los Angeles and Chicago. Hermès, which has maintained disciplined expansion, will add 12 US stores by Q2 2026, its fastest build-out rate in a decade.
The reallocation reflects structural pessimism about Chinese luxury recovery. Mainland China luxury sales dropped 22% in the final quarter of 2024, while Hong Kong luxury retail contracted 31% over the same period. Chinese consumers now represent 28% of global luxury purchases, down from 35% in 2023, as wealth-effect losses from property deflation and equity market volatility suppress discretionary spending. LVMH's Asia-Pacific revenue fell 14% in Q4, while North American sales grew 11%, the widest regional divergence the company has reported since 2009.
US luxury consumption is rising on three converging factors: wealth accumulation in technology and private equity sectors, resilient high-net-worth spending despite rate normalization, and inbound tourism from Latin America and the Middle East. American luxury buyers now account for 32% of global sector revenue, surpassing China for the first time since 2019. The shift is structural, not cyclical—US luxury sales grew every quarter since Q2 2023, while Chinese sales have contracted for nine consecutive quarters.
Equity markets have repriced the sector accordingly. LVMH shares closed at €628, down 34% from their April 2023 peak. Kering fell 41% over the same period, trading at €248. Richemont is down 29%, and Hermès, the sector's most resilient name, is off 16%. The selloff has pushed the median luxury stock to 14.2x forward earnings, the lowest multiple since the pandemic trough and well below the sector's ten-year average of 22.1x.
Allocators should track US same-store sales growth through Q2 2025, when the initial wave of new locations begins contributing. Chinese luxury spending data for the Lunar New Year period in late January will clarify whether consumption stabilizes or continues contracting. Richemont's March earnings call will provide the first detailed look at US capital deployment returns. LVMH is expected to announce additional US partnerships during its April investor day.
The luxury sector is no longer a China growth story. It is a US market-share battle, and the conglomerates with the fastest build-out cadence will claim the next three years of margin expansion.
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Consider rotating out of broad luxury exposure into single-brand US real estate plays with pricing power and customer acquisition momentum.
For the operator
Watch Q1 2025 US same-store sales velocity; if growth sustains above 9%, the pivot thesis holds and multiples will re-rate.
For the house
Huang Goodman reduced LVMH exposure by half in December, rotating proceeds into US commercial real estate trusts with luxury tenant concentration.
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