As of August 23, 2026, Europe's luxury giants are once again using a slightly more hopeful tone about the world's biggest customer base. Bloomberg Intelligence analysts Simbarashe Gumbo and Laurent Douillet say Chinese household spending is flattening out, and a few categories, especially premium cosmetics, are starting to bounce back.
That hope starts from a low spot. In July, sales among China's 25 leading luxury brands fell more than 10%, as the government works to prevent capital outflows and tax offshore wealth. Rich shoppers, who buy a lot of high-end goods, are exactly the group feeling those moves.
The pressure shows up in a recovery that looks like the letter K. In a K-shaped recovery, the wealthiest people are spending again, while most other shoppers are still taking their time. That means the current signs of life are real, but they are not coming from everybody.
Burberry gave the market its clearest happy number. Burberry Group Plc posted a 9% increase in Greater China retail revenues during the latest three-month period, and CFO Kate Ferry says the company's actions are driving outperformance. Part of the strategy is localized marketing, such as a documentary created alongside Chinese National Geographic magazine.
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Kering, the owner of Gucci, is a better example of how uneven things still are. Kering's chief executive calls China a "top strategic priority," while TD Cowen analyst Oliver Chen says China remains the "primary source of pressure across the portfolio," although trends did improve through the quarter. Even so, analysts expect Kering to return to growth in the fourth quarter across the region that encompasses China.
Other luxury names are showing similar patterns. LVMH's China business seems to be leveling off after several weak quarters, helped by improving trends in cognac and at Sephora. Hermes is expected to keep growing there, while Pandora is expected to see slower declines. Analysts are also paying attention to Moncler, where a price-target increase reflects strong demand in the U.S. and China for the luxury puffer-jacket brand.
The current signs of China's improvement are not a broad rebound. High-net-worth consumers, meaning people with a lot of money, are driving most of the spending. The biggest open question is whether regular Chinese households join in, because a two-speed recovery is hard to sustain.
Other challenges aren't going anywhere. Inflation keeps squeezing people in every market, and the Middle East conflict is putting pressure on shopping centers like Dubai and making it harder for luxury boutiques to rely on travel from Europe. Deutsche Bank's Do-Hyun Yoo said the path to reacceleration is not certain unless consumer confidence meaningfully improves and imports into China become stronger.
The next few months will test whether "stabilizing" becomes a real growth phase. Forecasts put Kering back on a path of growth in the fourth quarter, Hermes is expected to keep expanding, and Pandora is the strongest of the group. If that story holds, the luxury sector has more solid ground.
The signal for your portfolio is the width of the recovery. If China's middle class starts stepping back into stores, these forecasts could make the house stronger to say. If the spending stays only with the richest buyers, then the green shoots in China may remain small, and fragile, for a while longer.
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