The 5 ways ultra-luxury is beating the fashion crisis

While LVMH and Kering are experiencing concerning sales declines (LVMH posted a -2% in the first quarter of 2025, and Kering is expected to deliver similarly lackluster results) amid a context marked by the consumer crisis in China and uncertainty brought by U.S. tariffs, some ultra-luxury players are finding ways to grow. Brunello Cucinelli, Hermès, Moncler Group, and the Swiss watch industry have all shown remarkable resilience in the early months of 2025 – and their strategies, while different, share common traits. Brunello Cucinelli leads the pack with a 10.5% year-on-year revenue increase in the first quarter, reaching €341.5 million compared to €309.1 million in the same period last year. Growth was evenly distributed: +10.3% in the Americas, +10.1% in Europe, and +11.3% in Asia. The company also confirmed its guidance for 10% annual growth through 2026, aiming to double its 2023 revenue by 2030. Hermès recorded a 7% sales increase in the first quarter at constant exchange rates, reaching €4.13 billion. Although the pace slowed from +18% in the previous quarter, it remains well above LVMH’s decline. Japan was the top market (+17%), followed by the Middle East and France (both +14%), the rest of Europe (+13%), and the Americas (+11%). Leather goods grew by 10%, driven by new models like the Médor and Mousqueton bags, while apparel posted a +7%. Watches (-10%) and perfumes (flat) were weaker. Currency effects added €49 million to revenues, bringing total growth to 9%.

Exports of Swiss watches also performed well in March: +1.5% in value (CHF 2.1 billion), despite a 4.8% drop in volume. This helped offset a 1.1% year-on-year decline in the first quarter. The United States, the top export market, grew by 13.7%, while Hong Kong and mainland China remain weak (both down over 11%), though the decline appears to be slowing. Watches priced above CHF 500 rose 1.9% in value, offsetting double-digit drops in lower-end segments. Meanwhile, the Moncler Group beat expectations with a 1% revenue increase, reaching €829 million, thanks to the strength of the Moncler brand (+2%, to €721.8 million). Sales in Asia rose 5%, driven by Japan and Chinese tourism in Europe. Direct-to-consumer (DTC) sales rose 4%, while wholesale fell 5%, a widespread trend in the industry, as we will see. In truth, Stone Island faced more challenges, with a 5% revenue drop, though sales in Asia increased 14%, mainly thanks to China and Japan. Still, Stone Island’s DTC channel grew 12%, while wholesale plummeted 18% due to changes in delivery timing and more selective distribution strategies. Despite operating in the same macroeconomic environment as LVMH and Kering, these brands and groups show several operational and strategic traits that shield them from the broader slowdown—and in some cases, help them grow.

1. Focus on Branding and Product

While the major groups manage large and complex portfolios, which in some cases also include hotels, wellness centers, alcohol, and trains, the financial winners this quarter are all extremely focused on a clear identity and a relatively limited product range. Brunello Cucinelli, for example, despite having expanded its business in recent years by diversifying into accessories such as sunglasses and perfumes, and also expanding its womenswear segment by presenting evening dresses and ultra-luxury bags like the Duo, has managed to avoid passing fads by relying on a reputation based more on quality and craftsmanship than trends. The same goes for Hermès, whose business has already been diversified and branched out for years, with a strategy based on controlled scarcity and stylistic continuity. The same applies to the more multifaceted world of Swiss watchmaking, which on one hand follows a strategy similar to that of Hermès, and on the other, almost by necessity, must focus on a single category of excellence products such as timepieces. But perhaps the best example is the Moncler Group which in recent years, under the leadership of Remo Ruffini, has indeed expanded its offering making it similar to that of other major groups (the group's eponymous brand now produces perfumes, bags, and ready-to-wear through distinct and well-recognized lines like Grenoble or Genius) but has focused most of its communication on the core business of down jackets and luxury techwear, specifically concentrating on shows like the one in Courchevel, and bringing its Genius events to Shanghai as well as collaborating with individual superstar creatives like Nigo, Pharrell Williams and Paolo Sorrentino to elevate its brand equity.

2. The Retail Network

Another common trait is the investment in direct-to-consumer sales, which not only enables higher margins but also full control over the customer experience and brand narrative. For example, Moncler's direct sales increased by 4% in the quarter, while Stone Island’s grew by an impressive +12%, showing that customers prefer interacting directly with the brand, without intermediaries. Directly managing one’s own channels allows control over every aspect of the purchasing experience, from assortment selection to visual merchandising in stores, to customer service. This is crucial for brands like Hermès, which has always relied on a direct and carefully selected retail network. Moreover, the DTC model enables a much more effective management of data on purchasing behaviors, regional preferences, and customer habits – an “analytical” advantage that is particularly useful in a volatile market where agility in responding to changes can make the difference between stagnation and growth. Finally, direct sales protect brands from wholesale channel risks, such as overstock, unauthorized discounts, or loss of control over brand image, allowing them to independently manage pricing, product availability, and positioning. For a luxury consumer who is increasingly demanding and seeking experiences and values, the direct channel is often essential for building loyalty and maintaining spending.

3. Different Countries, Different Strategies

Another key to success has been the intelligence with which these brands have recalibrated their exposure to China. Unlike previous years, when the absolute focus was on exponential growth in the Chinese domestic market, today the best results come not from mainland China, but from Chinese consumers shopping abroad, driven by the recovery of international tourism flows. Brunello Cucinelli, for example, recorded a growth of +11.3% in Asia in the first quarter of 2025, thanks mainly to demand in Japan and South Korea, while maintaining a cautious approach in China. Over time, Cucinelli has built a balanced global presence, avoiding overexposure to individual markets: Asia today accounts for about 21% of revenue, Europe for 40%, and the Americas for the remaining 39%. This geographic balance has allowed the brand to capture the return of luxury tourism in destinations like Tokyo, Milan, and Paris. Moncler has adopted a similar approach: in Q1 2025, the brand recorded +5% in Asia, driven especially by Japan and Southeast Asia. China remains important but is no longer central as in the past. The group's strategy favors stable and high-potential markets such as the United States and Japan, where the brand continues to expand through selective openings and targeted marketing operations. In the case of Hermès, despite the China slowdown, there was 17% growth in Japan and steady expansion in Southeast Asia due to, on one hand, consumption by wealthy Chinese travelers and on the other, targeted investments in emerging areas such as Vietnam and Malaysia, confirming that brand loyalty is not necessarily tied to the place of purchase, but to the consistency of the experience offered globally.

4. Operational Control and Vertical Integration

More verticality, more profits. In the midst of a crisis that is not only financial but also one of meaning and trust, brands with a consolidated internal supply chain and direct distribution management perform better. Hermès is a prime example: a fully integrated structure, in-house production chain that guarantees consistent quality and the ability to respond quickly to demand evolution. Confirming this strategy, Hermès announced the opening of three new manufacturing facilities in France over the next three years, further consolidating control over leather goods production – a segment that grew by +10% at constant exchange rates in Q1 2025. The focus on vertical integration is also reflected in the performance of ready-to-wear (+7%) and textiles (+5%), categories in which the maison invests to maintain direct control over design and craftsmanship. Brunello Cucinelli follows a similar philosophy, based on a strongly territory-rooted artisanal structure and on a production that is almost entirely in-house. This model allows the brand to maintain very high quality standards and, at the same time, greater stability in costs and delivery times. The same applies to the Swiss watch sector, with products made for over a century practically in the same factories.

5. Long-term Vision vs. Quarterly Goals

Sudden shifts, U-turns, last-minute course changes – if anything kills profits, it’s working with a short-term, quarterly mindset. All the brands and groups mentioned counter market volatility with a sense of continuity rooted in clear values and structured projects – what we once called in a previous article “brand stability”. Brunello Cucinelli is perhaps the standard-bearer of this philosophy. The brand’s strategy is based on organic growth, customer loyalty and essentially “sticking to the plan.” Hermès, likewise, has never yielded to hyper-expansion or performative innovation with investments far from the short-term cycle of immediate returns. Moncler follows a similar path. The long-term vision of the group led by Remo Ruffini is expressed in the “brand first” strategy, which favors value building over aggressive growth, relying on strategic openings like the flagship on New York’s Fifth Avenue planned for next year, which does not respond to immediate dynamics but will affirm the brand’s long-term presence in a key market. Despite uncertainties related to tariffs, the American strategy remains “completely unchanged,” as confirmed by company executives. In Switzerland, Rolex, Patek Philippe and Richemont brands (which focuses on jewelry and will release results in May) are benefiting from the resilience of the high-end segment, with watches priced above 3,000 Swiss francs that, despite a volume decline, recorded a 1.9% increase in value in Q1. This suggests that loyalty to positioning and quality pays off over time, even if the category is in a phase of adjustment, as shown by the contrast between value growth and volume decline.