China’s luxury spending revival is losing momentum, Bernstein analysts have warned, after high-frequency data showed sales at luxury shopping centres falling sharply in July.
Sales across price ranges and product categories dropped 12% year on year during the month, according to data tracked by Bernstein and Mertico. The decline followed broadly flat growth in the first quarter and low single-digit growth in the second.
Bernstein said the figures suggested that a tentative recovery seen over the previous four quarters was beginning to reverse, raising the prospect of another false dawn for luxury brands operating in mainland China.
China luxury spending loses momentum
The investment firm cut its forecast for organic growth across the luxury industry in the third quarter to 4.9%, from 6.3% previously. Its full-year forecast for 2026 was reduced by 0.4 percentage points to 5.1%, although that would still represent a marked improvement on the estimated 0.5% growth recorded in 2025.
Bernstein said weak consumer confidence remained a central concern, with slower economic growth and falling property prices weighing particularly heavily on middle-class shoppers. Persistent deflation has also undermined expectations of a sustained improvement in discretionary spending.
The firm added that increased scrutiny of offshore wealth and the prospect of tougher tax enforcement could be discouraging high-net-worth individuals from spending, a segment that had previously held up better than the wider market.
The latest figures follow several short-lived signs of improvement in China, including at the end of 2023, 2024 and 2025. On each occasion, expectations of stronger government support and a revival in confidence failed to develop into a lasting recovery, Bernstein said.
Performance has varied significantly between individual brands. Zegna, Gucci and Richemont’s jewellery businesses have shown relative resilience, while LVMH has been weaker, according to the analysts.
Richemont remains Bernstein’s preferred name in the sector, supported by jewellery demand and stronger performance in so-called hard luxury. Gucci’s price reductions of between 20% and 30% could help Kering in the short term, although Bernstein cautioned that repeated discounting could damage the brand’s appeal over time.
LVMH may need to adjust the product mix at Louis Vuitton to reconnect with middle-class consumers, Bernstein said, leaving the industry increasingly dependent on individual brand turnarounds rather than a broad-based recovery in Chinese demand.
The warning comes after Reuters reported in August that LVMH’s finance chief, Cécile Cabanis, had described Chinese spending as essentially flat in the first half of the year, while Kering said sales in China remained lower in the second quarter.
