Over the past few days, LVMH and then Kering released back-to-back activity figures that initially appeared broadly in line with expectations for the first three months of the fiscal year.

However, a closer look reveals that the performance of LVMH's Fashion & Leather Goods division—the primary profit center for Bernard Arnault's group—and Kering's strategic brand, Gucci, turned out to be much worse than anticipated.

Following two years of stagnant luxury sales, hit by the slowdown in the Chinese market, a strong euro, and waning demand from aspirational customers amid inflationary pressures, the outlook for 2026 appears no more favorable given the repercussions of the conflict in the Middle East.

While the world's leading luxury goods group did not provide guidance for the current fiscal year, the owner of Louis Vuitton stated it was confident but also "vigilant" in the face of the current environment.

The sentiment was echoed at Kering, which this week set a four-year horizon to turn its results around.

Even Hermès is not spared

In line with this wave of pessimism, even Hermès—usually accustomed to beating market expectations—reported less vigorous organic growth for the first quarter.

These initial releases are undeniably a disappointment, as many professionals believed that the low bar set by consensus expectations ahead of the earnings season paved the way for positive surprises on the stock market.

But the market reaction has been harsher. Over the week, Kering shares have lost nearly 10%, Hermès has dropped 2.9%, and LVMH has eked out a 0.5% gain.

Since January 1st, the STOXX Europe Luxury 10 index has retreated by more than 15%, while the STOXX Europe 600 has advanced by 3.5% over the same period.

End of a cycle or a simple correction?

According to Dorian Anglada, an analyst at Saxo, the sector long considered a bastion of uninterrupted growth and market resilience is now facing what he considers a "moment of truth."

"The results from LVMH, Kering, and Hermès mark a break from the era of easy growth," the specialist noted.

"The question of whether we are witnessing the end of a cycle or a mere pause is at the heart of current analysis," he continued, suggesting that the current period of turbulence goes beyond a simple technical correction.

Saxo explained, however, that it is essential to note that fundamental demand for iconic brands remains present, as evidenced by the performance of jewelry divisions and the resilience of the U.S. market.

But while the slump in share prices and the mechanical compression of valuation multiples (P/E) could represent an opportunity for long-term investors, the risk of volatility remains high in the short term, he warned.

From the Danish bank's perspective, the "end of cycle vs. correction" debate will likely be settled over the next two quarters.

"A re-acceleration of organic growth above 4% would validate the scenario of a simple normalization, while prolonged stagnation would confirm a more structural cycle shift," judged Dorian Anglada.

In this gloomy context, there is no guarantee that other European players will fare any better.

Moncler will present its figures next Tuesday, while Burberry will unveil its half-year accounts on May 14. Richemont, the world's second-largest luxury group, will publish its 2025/2026 fiscal year results on May 22.