Anne-Laure Bismuth, HSBC head of luxury and sporting goods, also highlights the recent volatility of the KOSPI, as well as the correlation between stock market performance and luxury spending. “We will need to see whether this positive trend persists. The base of comparison also becomes more challenging from October,” she says.
Winning back the middle-class consumer
Top-tier luxury brands continued to outperform: Loro Piana “turned in another excellent performance”, according to parent company LVMH; Zegna was 16.5% in Q2; and Brunello Cucinelli was up 13.3% in the first half of the year.
Morgan Stanley’s Aubin highlights the still-significant performance gap between brands catering to ultra-high-net-worth individuals and broader luxury players. “The sector continues to struggle to attract consumers from the middle class, a key concern for investors,” Aubin says.
Cabanis, meanwhile, dismissed the idea that LVMH, alongside the rest of the industry, might be missing middle-class consumer demand. “I think — and it’s good news for our industry — that wherever there is wealth creation, which we have seen in the US and in South Korea, there is a strong appetite for luxury and for our goods across all clienteles,” she told investors.
Scotti says: “I think that half of the factors explaining the sector’s recovery are really the result of initiatives taken by brands: creative renewal, innovation in leather goods, price repositioning, a refresh of iconic products, and the reinvention of client activations. I think the other half comes from the huge wealth creation effect linked to AI. The most dynamic markets in Q2 are the ones benefiting the most from AI: South Korea, Taiwan — where Gucci turned positive — and the US.”
Continued focus on cost-cutting
Financial discipline was a recurring theme throughout the quarter’s earnings calls.
“We have seen a better-than-expected EBIT performance across the board in the first half of the year, apart from a few exceptions such as Swatch, as companies optimized their cost structures, which is usually the case when growth is softer,” Bismuth says.
LVMH’s profit from recurring operations for the first half of 2026 came to €8.7 billion, yielding an operating margin of 22.5% and beating expectations of 21.8%. Kering’s recurring operating margin reached 12.8%, an improvement compared with the first half of 2025 when it reached 12.4%.
“There is a real cost discipline effort that is working well, with chief financial officers making their voices heard more than usual,” says Carole Madjo, luxury goods analyst at Barclays. “Companies are cutting back as much as possible on all general overhead expenses. But marketing remains somewhat the key battleground.”
LVMH’s marketing and selling expenses were down 2% year-on-year in the first half of 2026. CFO Cabanis said: “We make sure that wherever we need it, we invest in the brands. When you go for creative renewal, for example, with Jonathan Anderson at Dior, you will invest in your brand, and that’s very clear”
