LVMH’s third-quarter results confirmed that the slowdown in luxury spending remains unresolved. The group’s organic sales rose by just 1%, totaling 18.5 billion euros, falling short of the 1.3% growth analysts had projected. While the shortfall was modest by headline standards, the breakdown exposed deeper challenges. The fashion and leather goods division—LVMH’s most lucrative segment—declined by 5%, worse than the 1.8% drop the market had anticipated. When a company’s core business underperforms nearly three times expectations, it signals that caution among affluent buyers is still spreading through the system.
Europe’s ten largest luxury firms have shed roughly 350 billion dollars in combined market value since January, with LVMH’s share dropping over 40% year-to-date. These are not marginal players adjusting to a single bad quarter; they represent the foundation of European luxury, erasing years of market gains. The pattern follows a familiar script: brands that expanded heavily in handbags and ready-to-wear are the first to feel the strain when consumer confidence weakens.
Yet the quarter also revealed a contrasting trend. Watches and jewelry, LVMH’s second-largest division, grew by 6%, down from the 9% increase recorded in the first half. While still positive, the slowdown indicates pressure is reaching the segment that had previously held up. Richemont, which controls Cartier, has outperformed with over 12% growth in jewelry, creating a clear divide with LVMH’s more moderate performance. The disparity highlights which companies are adapting better to changing consumer priorities.
Jewelry and watches defy luxury slowdown
Jewelry’s strength stands apart from the broader luxury slowdown. Unlike fashion, which depends on seasonal trends and disposable income, high-end jewelry and watches benefit from limited supply, historical value, and sustained demand. The secondary market reflects this resilience: Patek Philippe’s value has climbed 18.1% over the past year, while Rolex has remained flat. Diamonds are also recovering, with smaller stones leading the Rapaport index higher in September. The one-carat benchmark rose for the second consecutive month, a sign that demand is stabilizing at the lower end before expanding upward.
Auction results further illustrate this division. Phillips London’s Rolex Four Seasons collection achieved record totals, with four Daytonas selling for a combined 49.5 million dollars at charity auctions. The Summer Daytona alone reached 13.65 million dollars, a figure that reflects demand from collectors insulated from broader market trends. Smaller lots reinforced the pattern: a stainless Voutilainen 28Sport sold for 1.016 million dollars at Phillips New York, four times its high estimate, while a 1968 Rolex Daytona fetched 448,000 euros at Sotheby’s Paris. Independent watchmaking and vintage Rolex remain the most stable segments in the trade.
Hong Kong’s auction scene followed the same trajectory. Christie’s Watches Online Hong Kong Edit closed with 23.1 million Hong Kong dollars in sales, driven by a pink gold Eska wristwatch priced at 1.216 million Hong Kong dollars. Across three continents and multiple formats, the consistent theme was that items with scarcity and heritage command premiums even as luxury markets soften overall.
De Beers bid reshapes diamond supply chain
A major structural development emerged late in the week: Richemont and Signet Jewelers are in discussions to join a consortium bidding for De Beers. If the bid succeeds, it would grant watch and jewelry leaders, and the largest U.S. specialty retailer, a direct influence over rough diamond pricing. Currently, mining companies set prices based on their own forecasts, often disconnected from finished jewelry demand. A consortium with retail ties could realign incentives, ensuring rough diamond allocations respond to actual jewelry sales rather than speculative inventory goals.
Meanwhile, gold prices approached 4,200 dollars per ounce, propelled by central bank purchases. Official institutions acquired 63 tonnes in September, the highest since November 2024, with China alone adding 21 tonnes, its largest monthly purchase in three years. The trend is accelerating: 39 tonnes in August, 170 tonnes through August, and projections of 720 tonnes for 2026. When institutions of this scale accumulate steadily, they create a floor beneath the metal’s price regardless of luxury market conditions.
The secondary watch market told a quieter version of the same divergence. The WatchCharts Overall Market Index was virtually flat in September, yet Patek Philippe continued to rank among the top performers at plus 2.6% for the quarter and is up 18.1% over the trailing year, while Rolex lagged at plus 0.5% quarterly on a stagnation of demand against rising supply. Audemars Piguet landed in between at plus 1.2%. Flat headline, wide dispersion underneath.
Auction trends favor vintage over modern
Auction results also revealed a growing gap between vintage and modern watches. At Phillips New York, a 1970s Patek Philippe Nautilus reference 3730 sold for 1.12 million dollars, more than double its high estimate, while a modern Rolex Daytona reference 116505 brought 285,000 dollars, well below its 350,000-dollar estimate. The difference highlights how collectors prioritize rarity over newness, even within the same brand.
Dealers noted that auction activity extended beyond iconic references. Mid-tier independent brands, particularly those with limited production runs, also saw robust demand. At Christie’s Hong Kong, a 2018 F.P. Journe Chronomètre à Résonance sold for 2.1 million Hong Kong dollars, 1.3 million Hong Kong dollars above its estimate, demonstrating that niche watchmaking retains its appeal. The sale confirmed an earlier trend: collectors are willing to pay extra for craftsmanship and exclusivity, regardless of brand prestige. One specialist in vintage Patek Philippe observed that the secondary market for pre-1980s pieces had tightened further, with buyers now seeking rare complications or factory-seconds with exceptional provenance. This shift reflects a broader move from speculative purchases to long-term investments in tangible assets.
The diamond sector’s recovery gained momentum, with retail data showing changing consumer preferences. While high-net-worth buyers continued driving demand for large stones, mid-market diamonds, particularly in the 0.30 to 0.50 carat range, experienced the most consistent growth. The Rapaport index for 0.50-carat diamonds rose by 2.3% in September, marking the third consecutive monthly increase, while the 1.0-carat benchmark climbed 1.8%.
Analysts attributed the strength to engagement rings, where younger buyers were opting for slightly smaller stones paired with higher-quality cuts. A New York jeweler sourcing lab-grown diamonds reported that inquiries for 0.40-carat solitaires had doubled since the start of the year, with customers prioritizing clarity and color over size. The trend mirrored the secondary market’s recovery, where smaller, more accessible diamonds led before larger stones followed.
