L'Oréal has reported stronger sales of top-end skincare lines in China this year, while LVMH and Hermès say demand for leather goods remains largely flat to only slightly firmer.
L'Oréal chief executive Nicolas Hieronimus said luxury and dermatological skincare brands are growing at around 7% in China, a pace he described as significantly faster than in recent quarters, with certain top-end marques, including Lancôme and Helena Rubinstein, performing even better. China was the leading contributor to growth at the group's North Asia operations last quarter, with its Luxe premium division expanding 10% in the country. Estée Lauder chief executive Stéphane de la Faverie said earlier this year the company expects prestige beauty growth in China to accelerate in its 2027 financial year, which began on April 1, with mid single-digit percentage growth anticipated.
The picture at leather-goods-focused houses is markedly different. LVMH finance chief Cécile Cabanis said Chinese spending was essentially flat in the first half. Hermès chief executive Axel Dumas said he had not observed meaningful improvement in the Chinese market, characterising it as stable rather than recovering, and pointed to weak pork prices as a signal of subdued consumer sentiment. Kering, owner of Gucci, said its China sales remained down in the second quarter; chief executive Luca de Meo acknowledged the group is addressing past strategic missteps in the market and described China as an increasingly difficult and competitive environment.
Research conducted by Oliver Wyman together with the Tax Free World Association found that affluent Chinese consumers' stated intention to increase spending was markedly higher for prestige beauty than for leather goods, at 37% against 4% respectively. Oliver Wyman principal Kenneth Chow attributed the divergence to skincare's lower price point and its more frequent, self-directed purchase pattern, compared with the higher-ticket and more postponable nature of leather goods. Roland Berger partner Jonathan Yan characterised the shift as a structural change in how younger consumers relate to luxury branding. Foresight Performance Partners co-founder Jacques Roizen said aspirational consumers had not traded down in absolute terms but had concentrated spending at the top of categories they can still afford.
China's broader luxury sector saw a significant downturn in 2024 amid slowing growth and a property market slump, with a choppy recovery since, including a pickup in the second half of last year followed by a weaker start to 2026. Executives at LVMH and Hermès said they had seen little improvement in Chinese demand in recent months, pointing to fragile consumer confidence despite government stimulus measures and firmer equity markets. Many leather-goods-focused houses, including Hermès and LVMH, hold a smaller share of the skincare offerings that dominate China's beauty market.
The reported divergence leaves beauty specialists and leather-goods-led groups on different trajectories heading into the current year: L'Oréal's North Asia division posted accelerating China growth last quarter, Estée Lauder has guided toward further prestige beauty acceleration through its 2027 financial year, while Kering's chief executive has described the Chinese market as among the most competitive it faces, with LVMH and Hermès reporting demand that has yet to firm meaningfully.
