The news: Luxury spending is losing steam globally as war, economic uncertainty, and political unrest erode consumer confidence and shoppers’ appetite to spend on designer goods.

• Kering’s revenues fell 1% YoY in Q3, with comparable sales at flagship brand Gucci falling by 6%, worse than the 3.3% decline forecast by analysts.
• Prada’s organic sales grew by just 1%, a significant deceleration from the previous quarter that the company blamed on a “turbulent” environment.
• Hermès’ Q3 performance fell short of expectations, with constant currency sales growth of 4.3% missing forecasts for 5.2%, per WWD.

The big picture: The slowdown at Prada and Hermès is particularly notable, given that both brands are among the most desirable and have been—up until now—less vulnerable to volatility in the luxury market. Their sales deceleration suggests that the headwinds facing luxury spending, including war in the Middle East and weakness in China, are beginning to hurt even the industry’s most resilient players.

Weakness in Chinese luxury spending is proving particularly painful. As Hermés’ executive vice president of finance, Éric du Halgouët, noted on the company’s earnings call, China’s ongoing property crisis, depressed consumer confidence, and a recent financial market downturn is reducing households’ ability and desire to spend. Those factors, coupled with a tax crackdown on high-net-worth individuals, have severely dampened Chinese luxury consumption and challenged hopes for an industrywide recovery this year.

Relief elsewhere appears limited. The war in the Middle East is hurting spending in what was once one of the fastest-growing luxury markets, while political unrest in France and Italy has led to looting and store closures, causing tourists to steer clear.

Implications for luxury retail: Brands facing unfavorable conditions in Europe, China, and the Middle East will have no choice but to redirect their focus to the US, where luxury spending is expected to rebound after a sluggish 2025. But that comes with its own set of risks: American luxury shoppers are showing signs of fatigue as persistent cost-of-living pressures cause even affluent households to adjust spending.