\n<\/p>\n
Has Europe captured the lost demand? Not enough to transform the region into a growth driver, analysts say. HSBC has revised its organic growth forecasts for the full year downward for Europe, from 4% to 2.5%.<\/p>\n
Galeries Lafayette Haussmann, whose sales surpassed \u20ac2 billion last year, offers a useful benchmark. Its sales were flat in Q1, after 4% growth for the 2025 full year. The slowdown can be credited to a decline in Asian tourist spend in Q1, confirming a trend that emerged at the end of last year. During a press conference on April 8, Galeries Lafayette CEO Arthur Lemoine partly attributed it to the Middle East crisis, as some Asian travelers pass through the region en route to Europe, while higher jet fuel costs are pushing up long-haul airfares. However, the Boulevard Haussmann flagship store in Paris saw a 14% uptick in shoppers from the Middle East in March, coinciding with the Ramadan period. \u201cWe remain vigilant,\u201d Lemoine said.<\/p>\n
Beyond revenues, consumer sentiment hangs in the balance. \u201cIf the conflict lasts for months, what will really suffer is the so-called \u2018feel-good factor\u2019, or the idea that you don\u2019t buy luxury goods just because you have money, but because you feel good about yourself,\u201d Rambourg says. \u201cIf the conflict drags on for months, consumers will face inflationary pressures and an anxiety-driven environment, so that feel-good factor will be affected.\u201d HSBC has lowered its growth estimates for the sector in 2026, from 7% to 5.9%.<\/p>\n
The impact of rising resource costs might also play out, especially in gas. \u201cMiddle lower income [consumers] will suffer with gas expenditures going up, and this could slightly impact discretionary spending depending on duration and severity,\u201d says TD Cowen analyst Oliver Chen. \u201cGas surcharges will not necessarily impact luxury so quickly, but there are a lot of risks to consider based on the performance of the S&P500, the related wealth effect, and volatile consumer confidence factors, which are generally important drivers of luxury spending in the US.\u201d<\/p>\n
Brunello Cucinelli, which kicked off the earnings season on April 9, reported sales up 14% in Q1, led by the US and Asia, following 12% growth in Q4.<\/p>\n
A slow recovery is underway in China, analysts say. \u201c2026 appears to have started sequentially better than Q4, with single-digit growth, albeit with pronounced divergence across categories, cities, and brands,\u201d UBS luxury analyst Zuzanna Pusz wrote in a note.<\/p>\n
Galeries Lafayette, which has three joint venture stores in China \u2014 Shanghai, Beijing, and Shenzhen \u2014 has seen no improvement and is therefore reviewing its operations in the country. \u201cThe global context leads us to observe structural changes in the market, and requires us to adjust our China model,\u201d Lemoine said at the press conference. \u201cMarket activity has contracted, with a shift toward more local brands at the expense of international ones.\u201d<\/p>\n