Luxury Sector Faces Decline as Tourist Spending Falls
(MENAFN) High-end fashion houses have seen a noticeable dip in revenues across European and Japanese markets, as American and Chinese tourists—historically key contributors to international luxury demand—have scaled back their spending abroad, as per a news agency.
In the previous year, the luxury market experienced a significant uplift, largely fueled by tourism.
According to the publication, Chinese shoppers rushed to Japan during a period when the yen had dropped to its lowest level in three decades.
Simultaneously, American buyers took advantage of a robust dollar, splurging on upscale items throughout Europe.
However, these favorable conditions have shifted in 2025. The news agency reported that the Japanese yen has regained strength, while the US dollar has depreciated due to new tariffs introduced by US President Donald Trump.
These monetary fluctuations have directly impacted international spending patterns.
In an interview with the paper, Cécile Cabanis, chief financial officer at LVMH—the parent company of iconic labels such as Louis Vuitton and Dior—linked a 9% organic drop in second-quarter revenue in its fashion and leather goods unit to altered tourist flows.
“Spending by American tourists slowed down very strongly,” she stated, noting that the fall in tourist activity in Japan has not been compensated by domestic consumers.
Further emphasizing this trend, the news agency pointed out that American demand may decline even more, as Trump's tariffs are expected to drive up prices on imported luxury goods.
In response to these developments, investment firm Bernstein has revised its 2025 forecast for luxury sector growth—from a 5% increase to a 2% contraction.
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