Forget the China gloom — luxury bosses say shoppers are back

Chinese shoppers are returning to luxury. Top executives from Prada, Coach, EssilorLuxottica and Value Retail told CNBC they are seeing demand stabilize in China after months of weakness, even as the broader luxury goods sector continues to report lower spending among Chinese consumers at home and abroad.

China was on its way to becoming… The largest luxury goods market in the world during the Corona virus pandemic, But the sector has slowed sharply since then. High unemployment rates among youth, Prolonged real estate deflation Weak household confidence has affected discretionary purchases, especially among middle-income shoppers.

Speaking to CNBC’s Charlotte Reid at the JPMorgan Global Luxury and Brands Conference in Paris, France, executives said they are starting to see a change in spending patterns. Andrea Bonini, Prada Group’s chief financial officer, said the company was “cautiously optimistic.”

“We see things really stabilizing,” Bonini told CNBC, adding that “the structural trends in this industry are still there, and they are still there in China as well.”

Prada’s CFO said a more “normal” backdrop may only emerge in 2026 after the sharp fluctuations that followed the pandemic.

The coach is also seeing strong momentum. “We had a great quarter. Our China business grew 20%,” Todd Kahn, CEO and head of the brand, told CNBC, a trend he said has continued for several quarters. He said Coach’s positioning helped attract a more cautious consumer, adding: “Our beautiful positioning in China, especially if the consumer is more cautious, really resonates.”

The company is deepening its presence on the ground, with a 25-year presence in the market, co-design studios in China, and expansion into regional centers such as Wuhan. The bus was also somewhat insulated from exposure to US tariffs.

“So, 40% of our growth is international. So, internationally, the US tariffs you’re referring to have no impact,” Khan said.

LVMH, for its part, pointed to early signs of stabilization. Last month, the luxury giant I mentioned Growth of 1% in the third quarter – its first quarterly increase this year – with CFO Cécile Cabaniss telling analysts that “mainland China turned positive in the third quarter,” according to Reuters.

However, analysts cautioned against assuming a full recovery.

“It’s too early to call it a complete U-turn,” Chiara Battistini, head of European luxury at JPMorgan, told CNBC, noting that the apparent improvement came against a “particularly easy” comparison base. Some of the rise reflects a repatriation of spending to mainland China rather than a widespread acceleration, she said.

Battistini said the overall picture across “total Chinese consumers” in Asia remains “more mixed”, although China’s overall backdrop remains “very complex”.

Global brands are being pushed to localize more aggressively as competition from Chinese brands intensifies. Like CNBC’s Evelyn Cheng I mentioned A few weeks ago, many were ramping up China-focused marketing — in some cases to more than 40% of revenue, according to WPIC’s Jacob Cook — while accelerating product cycles and designing creatives using local consumer data.

The emergence of social media platforms Xiaohongshu and Douyin has also forced companies to rethink their content and product strategy.

This change is slowly trickling down to major retailers and luxury goods companies, which are experiencing modest growth in the region. Retail outlet operator Value Retail has seen strong traction. Chairman Scott Malkin said the company’s properties in China are “going very well right now,” noting that global brands have encouraged the company to expand into China to ensure “the correct presentation of real surplus.”

Malkin said the outlets continue to attract “the aspirational buyer who will become a full-price customer again at a different moment.”

The same applies to the EssilorLuxottica eyewear range, which also recorded broad-based growth. “We were double digits in North America, double digits in Europe, and double digits in Asia,” said CFO Stefano Grassi.

“We’re seeing the consumer not backing down. We’re seeing consumers being drawn to product innovation,” Grassi said. Luxury product owners agree that China is stabilizing, but has not yet rebounded.

As brands reshape their strategies and analysts urge caution, recovery remains slow. However, as Prada’s Bonini said, the “structural trends” fueling Chinese luxury have not gone away, but rather are taking longer to re-emerge.

— CNBC’s Christopher Kang contributed to this report.