Is the fashion crisis finally over? The financial results for the third quarter of 2025 are encouraging but uneven.

When does healing begin? When the wounds heal or when they stop bleeding? A philosophical question that, one way or another, will have crossed the minds of several analysts when comparing the results of the major fashion groups in the third quarter of 2025, which ran from July to September. The most emphatic headlines in the press are already talking about a turnaround in the crisis, analysts speak of “glimmers of hope” and “cautious optimism,” but the truth is that the luxury sector is still in the midst of a transition where sales have stabilized or at least stopped declining, but the macro-problems that caused the crisis have remained substantially unchanged, particularly with regard to China. Rather than over, the crisis finally seems under control.

Amid inflation, geopolitical tensions, and a decline in consumer confidence, the major European groups recorded mixed performance. Smaller and more "focused" groups with less extensive but individually very strong brand portfolios, such as Hermès, Zegna, and the Prada Group, held up more or less well, while difficulties continued, albeit more mildly, for the two giants LVMH and Kering, where the dispersion of resources in much more branched brand portfolios led to inferior results that were offset by other collateral businesses that do not specifically concern the areas of fashion and leather goods.

In general, the core divisions of fashion, leather goods, and accessories that we have considered on their own as much as possible, have seen mixed trajectories with organic growth or at constant exchange rates varying from mildly negative to robustly positive. Comparing the results of the six main players in the sector (LVMH, Kering, Ermenegildo Zegna Group, Prada Group, Hermès, and Salvatore Ferragamo), it is noted that overall the sector has seen a positive rebound in direct channels and in markets like Europe and North America, while Asia continues to represent a challenge.

Performance Comparisons

For this quarter, Hermès has emerged as the undisputed leader in the sector, with 13.3% growth at constant exchange rates in the Leather Goods & Saddlery division, which accounted for nearly 50% of the group's total revenues, which stood at €3.9 billion for the quarter and €11.9 billion in the first nine months, while the Fashion division grew by +6%. There was double-digit expansion in Europe and the USA (averaging around 12-13%, but the brand calculates sales in France differently) and +4% in Asia excluding Japan, where growth was +15%. In contrast, LVMH recorded an organic decline of 2% in the Fashion and Leather Goods division, at about 9.5 billion euros, an improvement over the -9% in the first half but still showing weakness mitigated by gains in Asia (+2%) and North America (+3%), while Europe marked a -2% due to a drop in tourism and currency impacts, with group total revenues at 18.3 billion euros up 1% organically.

Kering, among the luxury groups most affected by the crisis, recorded a 5% decline in sales on a comparable basis in the third quarter, which, although negative, exceeded analysts' expectations and marked a progress compared to the 15% organic decline of the previous quarter, indicating partial stabilization in a context of an overall 14% organic contraction for the period. Bottega Veneta is the only brand to have actual growth of +3%, while Gucci lost 14% organically (an improvement over the -25% in the previous quarter) and Yves Saint Laurent 4%, although «sales have returned to growth in North America and recorded only a slight decline in Western Europe. The new collections have been enthusiastically received, and the Maison has recorded double-digit growth in the Ready-to-Wear and Footwear sectors», as the group wrote. In short, the severity of the situation is easing but still it cannot yet be said that we are out of it.

Another winner of this quarter is the Prada Group, which instead accelerated with 8% growth at constant exchange rates in the fashion and leather goods division, contributing to net revenues of about 4.07 billion euros in the first nine months (+9% at constant exchange rates) that have clearly outperformed LVMH and Kering thanks to the boom of Miu Miu (+41% retail sales in the first nine months and revenues up 29% in the third quarter), while the Prada brand recorded a -2% decline in retail sales in the first nine months, at 2.53 billion euros, with strong performance in direct channels and regional growths such as +21% in the Middle East, +15% in the Americas, and +10% in Asia-Pacific, and a slight improvement in China whose individual performance we do not know. The picture thus shows the group's good resilience but also the pressures on the flagship brand.

Ermenegildo Zegna Group showed 3.6% organic growth in total revenues to 398.2 million euros in the third quarter of 2025, driven by +7.4% in direct channels and +3.6% organic for the Zegna brand in the first nine months (to 819.8 million euros), although Thom Browne lost 17.8% and Asia remains to be conquered, with group totals at 1.33 billion euros down -2.3% year-over-year. Finally, Salvatore Ferragamo achieved stabilization with 1.7% sales growth in the third quarter, performing better than the last quarter which had seen a 14.6% decline but with sales in the first nine months 6.6% lower than in the first nine months of 2024. Growths in North America and Europe nevertheless balance the decline in Asia-Pacific, giving rise to cautious optimism for the fourth quarter.

A Cautious and Uneven Recovery

It can certainly be said that this third quarter has outlined the timid beginning of a recovery phase, with an average organic growth for the fashion/leather goods divisions around +2-3%, compared to -5-7% in the first half. Stock prices reacted positively to LVMH's results, the first to be presented, with a rally involving Ferragamo (+6.4%), Hermès (+3%), Prada (+4%), and even Moncler which has not yet published its results and grew between 5% and 8%, signaling optimism for demand stabilization. This does not detract from the fact that disparities are evident: premium players like Hermès and Prada have managed to perform well thanks to aspirational brands and strong direct channels, while giants like LVMH and Kering are facing restructurings to manage the contraction of the entry-level segment.

Geographically, North America seems to be the most performing region with average growth of +4-6% driven by stable local demand among high-income consumers, while Europe is in slight decline of  1-2% due to the slowdown in tourism and currency fluctuations. Asia remains uncertain with a lukewarm average increase, with China no longer consuming as it once did. A fact that perhaps indicates a more definitive change in the region's spending patterns. Among the cross-cutting trends are the rise of direct channels, which are increasingly important; and the beginning of a focus on personalization to differentiate from fast fashion.

It could therefore be said that the luxury sector today is in transition towards minimal growth, around one digit, for the entire year, while reviewing the strategies used so far in more “commercial” luxury. Certainly, everyone will need to address the issue stemming from having a narrower and especially more selective consumer base due to prohibitive prices. In general, the next two quarters will determine whether the trajectory taken by luxury is heading upwards or downwards. Until then, caution will be needed.