Revenues have been falling since 2024—and it looks like the trend will continue for the remainder of the year.
Things are still looking bleak for the global fashion industry. Revenues have been falling since 2024. Brands have been reshuffling their upper echelons in response—but to little or no avail so far.
Chanel is the latest to report a dip in profits. Per Forbes, the French label’s sales plunged 28% in net profit to $3.4 billion last year. “We saw challenging macroeconomic conditions which had an impact on sales in some markets,” Chanel CEO Leena Nair said in a statement, as quoted by Forbes.
Nair is not wrong. Global revenue, in fact, dipped 5.3% to $18.7 billion. And Chanel is not alone in this quagmire either. The POST has followed the latest developments in what can only be seen as an increasingly unpredictable and volatile luxury fashion industry.
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Earlier this week, we reported on Burberry slashing off 20% of its global workforce due to sluggish sales. Last month, we featured fashion giant Kering—owner of distinguished brands such as Gucci, Yves Saint Laurent, and Bottega Veneta—which also revealed that it saw its first quarter revenue dip 14%. Most striking is the case of its flagship label, Gucci, which had its revenues dropping a massive 25%.
LVMH, the mother company of labels such Louis Vuitton, Dior, Bulgari and Tiffany & Co, has also been reported to have missed its first quarter revenue forecast, registering a 3% decline in sales, per Reuters.
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What explains the downturn?
These less than stellar numbers are a symptom of a broader malaise that has been hounding the world’s biggest luxury fashion labels for well over a year and counting.
Early this year, McKinsey & Company released a report titled “The State of Fashion 2025: Challenges at every turn,” which looked into the current woes of the global fashion industry. In the report, the global consulting firm mentioned that among the challenges faced by luxury brands are economic uncertainty, a dynamic market, and consumer behavior shifts.
“Consumers are becoming more value-conscious as they grapple with high inflation and tighter discretionary budgets,” the report states. “Even in the luxury segment, shoppers are scrutinizing purchases more carefully and shifting toward brands that offer clear, perceived value.”
The report continued that we are amid a so-called “long-feared cyclical slowdown,” wherein consumers, struggling against high inflation, are becoming more and more price sensitive. Then there is also the rise of fakes, the acceleration of climate change, and the ongoing global trade wars.
Even more bad news for fashion houses, including the ones once seen as invincible such as Kering and LVMH, is that even in “the best of times,” the report anticipates a rough remainder of the year for them.
Consumers are also increasingly open to secondhand luxury—seeing it as more sustainable and accessible. Platforms like The RealReal, Vestiaire Collective, and Rebag are thriving as customers seek luxury—at a better price point.
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Optimistic spots
But not all is lost. Per the report, there are geographic drivers of revenue and economic profit that are “undergoing historic shifts” which can benefit the industry. For instance, falling inflation and increased tourism in Europe, the resilience of high-net-worth individuals in the United States, and new growth engines in Asia such as Japan, South Korea, and India, are good news for the luxury sector.
The report acknowledged that China will remain Asia’s “center of gravity,” but it foresees brands will pivot their focus to other Asian markets, most notably the ones mentioned above. With an increasingly global pool of endorsers, I think the brands have already made that shift. The POST has reported on the luxury brand ambassadors you’ll be seeing everywhere this year, many of whom are Asians.
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Industry’s response
To reach these consumers, the fashion leaders polled by the annual BoF–McKinsey State of Fashion Executive Survey said they will localize go-to-market models, broaden price ranges, and focus on brand positioning “to capture the attention of shoppers who are increasingly prioritizing value.”
They also mentioned driving the expansion of the resale and off-price segments. For brands that do not wish to pivot to these measures, the industry insiders said they must demonstrate to customers why their products are worth the premium price. (We’re looking at you Hermes.)
Another way for luxury brands to attract consumers is to improve the shopping experience, given that shoppers are now back to in-store shopping at prepandemic levels across the world. McKinsey & Company suggests starting with well-trained staff who are empowered to assist and inspire customers. It also added that brands can harness the power of AI, that AI-powered curation, content, and search can help customers discover brands and products more effectively—better compelling them to make that purchase.
Looking ahead
For 2026, the McKinsey& Company report recommends the brands to continue monitoring ongoing shifts in global trade and anticipating their impact on sourcing. It added that retailers will need to “accelerate their reconfiguration of supply chains to prioritize near-shoring and manufacturing in geopolitically aligned countries.”
Given an extremely volatile global trading landscape, supply chains should be more agile, the report advised, with companies making efforts to reduce excess inventory and minimize the risk of shortfalls.
Lastly, the report emphasized that the climate crisis should remain a top priority for luxury fashion labels. This is despite shoppers proving they are less willing than hoped to pay extra for greener, more sustainable products. It said that those who choose to approach sustainability with a “long-term mindset” even while faced with short-term challenges will be rewarded with more efficient business operations and a competitive advantage.
The report ended with the conclusion that “the old playbook is now obsolete; the industry will need a new formula for differentiation and growth.” Now it remains to be seen which of the fashion labels will be able to evolve and thrive in an increasingly hostile landscape.
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