The luxury market has been on a downward spiral over the last few years, facing one of its worst slumps since the Great Recession.
This slump is partly due to an unpredictable global economy and ever-evolving consumer habits, causing a softening in customer spending, especially in the China region, which used to be luxury’s top client.
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Many luxury fashion companies, even the most prestigious ones like LVMH (LVMHF) and Kering, have faced continuous sales slowdowns. However, others, like Prada (PRDSF) and Hermés (HESAF) , have overcome all odds by defying this years-long luxury slump.
Because of the inconsistencies in the luxury market’s biggest contenders, the exact origin of this trend is unknown, and the solution has become even harder to pinpoint.
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According to the latest report by The State of Fashion, the global growth rate of the luxury industry is predicted to be around 1-3% between 2024 and 2027, signaling that a full recovery of the industry won’t be happening until at least two years from now.
However, a luxury fashion brand might have just found the solution to end this slowdown in luxury consumption.
Light illuminates a range of puddle boots and handbags in a Bottega Veneta luxury goods store.
Kering reported spiraling revenues but saw growth in one brand
On Tuesday, Kering (PPRUF) reported its annual financial results for 2024. Although the results were still mostly negative, the company slightly beat forecasts thanks to one brand that outperformed all others.
Kering is a French multinational luxury group that owns some of the world’s most renowned fashion brands, including Yves Saint Laurent, Gucci, Balenciaga, Bottega Veneta, and Alexander McQueen.
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The company’s revenues declined by 12% compared to last year as reported and on a comparable basis, with Gucci falling by 23% as reported and 21% comparable, making it the least profitable brand out of all in its portfolio.
However, Bottega Veneta’s revenue increased by 4% as reported and 6% comparable, making it the most profitable single-name brand.
Bottega Veneta is an Italian luxury fashion brand known for its leather goods and quiet luxury aesthetic.
Quiet luxury could be the luxury fashion market’s saving grace
Quiet luxury refers to brands that use high-quality materials and craftsmanship while maintaining an understated and elegant style for their products, avoiding big logos and bright colors.
The main attraction to quiet luxury is that it’s timeless and can be worn for years to come. Since it won’t go out of style, this is a key factor in terms of value because luxury products come with incredibly high prices, making them a great investment, in theory, that will pay off over time.
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One could even say quiet luxury is an effective fence against inflation, and Bottega Veneta customers seem to agree.
According to PurseBlog, the price of Bottega Veneta’s Small Hop Bag increased by 26% in 2024 alone, with increases in most of its bags ranging between 20% and 30%. This makes this brand’s products a more profitable investment than Kering’s stock.
Unlike Bottega Veneta, Gucci is the complete opposite of quiet luxury. This brand is known for its distinctive double-G logo, plastered throughout its designs.
Although the brand was founded in 1921, and some of its products contain quiet luxury elements, its huge logo is still prevalent in most of its collections.
According to Bolsino, the price of various Gucci products has only increased between 10% and 15% from 2020 to 2024, making this luxury brand a less profitable investment than its sister, Bottega Veneta.
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