Luxury Retail in the US: A Bright Spot Despite Tariffs and Uncertain Consumer Confidence
The US luxury market is defying expectations as a bright spot for luxury retailers, at a time when China’s recovery is uneven and Europe is facing cautious spending trends. Despite the challenges of rising tariffs and higher prices, nearly every major luxury group has identified the US as a key growth engine in their latest earnings reports.
In the third quarter, the US showed significant strength compared to the previous quarter. LVMH reported stronger-than-expected performance in the US, with a 3% increase in sales compared to the same period in 2024. Similarly, Kering highlighted North America as a standout region, with a 3% increase in sales and strong performance across all brands. Hermès, Ferragamo, Zegna, and Prada Group also experienced growth in the Americas, showcasing the region’s resilience in the face of economic challenges.
This week, US-based luxury retailers such as Capri, Tapestry, and Ralph Lauren are expected to report their earnings, while Burberry and Richemont will follow suit next week. Despite ongoing challenges, the US has been a strong performing region for luxury brands like Burberry and Richemont in recent quarters.
Earlier this year, concerns were raised about the impact of tariffs on luxury demand in the US. However, luxury brands have been able to leverage their pricing power and increase prices by 5-10% without significantly dampening demand. Analysts attribute this resilience to the higher income consumers in the US, who have been less affected by inflationary pressures due to tax cuts and a positive wealth effect from the stock market rally.
In conclusion, the latest results suggest that the US luxury market is not only weathering the turbulence caused by tariffs but is also emerging as a counterweight to softness in other regions. Despite uncertainties surrounding consumer confidence, the US continues to be a key growth driver for luxury retailers, showcasing the strength and resilience of the market.
