Luxury Sales Plunge in China as Tax Push Hits Wealthy Shoppers
Global luxury brands are facing a deepening sales slump in China as the country's campaign to tax offshore wealth dampens spending by its richest consumers. Sales at the 25 biggest luxury labels in China dropped more than 10% in July, according to three research firms surveyed by Bloomberg, worse than June's slowdown and a sharp reversal from earlier this year. LVMH's Louis Vuitton and Dior, Kering's Gucci, Bottega Veneta and Balenciaga all recorded double-digit sales drops, while Hermes swung from gains to declines and growth for Chanel and Prada decelerated significantly. The slump coincides with China's sweeping efforts to stem capital outflows and reclaim tax revenues, including tighter controls on cross-border stock trading and demands for citizens to pay billions of dollars in levies on offshore assets and investment gains. The clampdown has contributed to erasing last year's 28.3% rally in the MSCI China Index, which is down 8.9% this year, and Hong Kong's Hang Seng Index has also lost steam after strong gains in 2025.
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Capri Holdings closes 41 stores worldwide as it narrows focus to Michael Kors and Jimmy Choo
Capri Holdings has closed 41 retail locations over the past year, reducing its global store count to 871 as of June 27, 2026, from 912 a year earlier. The closures include 33 Michael Kors stores and eight Jimmy Choo locations, leaving Michael Kors with 662 stores and Jimmy Choo with 209. The move is part of a broader streamlining effort after the company sold Versace to Prada Group in December 2025 for €1.25 billion, and comes as Capri reported a 3.5% decline in first-quarter fiscal 2027 net revenue to $769 million, with Michael Kors revenue down 7.1% to $590 million while Jimmy Choo revenue rose 10.5% to $179 million. The company now expects full-year fiscal 2027 revenue of approximately $3.4 billion, below earlier forecasts, but maintained its earnings-per-share outlook of about $2.15. CEO John Idol expressed optimism, citing strategies to elevate brand desirability and improve customer experience across both remaining brands.
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Prada net profit falls 15 percent to 327 million euros in first half
Prada reported a 15 percent drop in net profit to 327 million euros in the first half of the year, beating analyst consensus forecasts. Revenue rose 11 percent to 3.0 billion euros, with retail sales at the flagship Prada brand up 3.3 percent in the first quarter and 6.3 percent in the second quarter, while Miu Miu revenue grew 2.5 percent against a tough comparison. The company cited a disrupted macroeconomic environment and warned that growth opportunities are waning, with the Middle East conflict curbing second-quarter growth by one percentage point at Prada and about three points at Miu Miu. Versace, acquired last year, performed in line with expectations as Prada focuses on improving quality and retail execution.
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Prada tops BofA luxury brand ranking in first half of 2026
Prada, Michael Kors, and Alaïa recorded the strongest combined digital brand rankings among soft-luxury names in the second quarter, according to Bank of America's latest Brand Leading Indicator. The indicator ranks 43 soft-luxury brands based on social media followers, online searches, and website traffic, with momentum weighted at 60% and digital presence at 40%. Prada ranked first overall, followed by Michael Kors and Alaïa, while Michael Kors led three-month momentum after Google searches surged from a low base, lifting it from 33rd place in the first quarter. Prada and Alaïa were identified as the strongest brands in the first half of 2026, maintaining consistently high positions across both quarters. Chanel showed the biggest improvement late in the period, climbing from 10th in April to first in June as interest grew around Matthieu Blazy's collection, with Alaïa and Coach ranking second and third for June. Gucci's quarterly momentum ranking improved by 20 places to sixth, supported by stronger US website traffic, online searches, and promotional events, while Saint Laurent rose five positions to 16th, though fellow Kering brand Balenciaga dropped from 13th to 35th. Among LVMH brands, Loro Piana returned to the top 10 at seventh, Louis Vuitton climbed to 10th from 28th, and Dior finished 31st after Chinese search activity weakened. Swatch led hard luxury, helped by online interest surrounding its Royal Pop pocket watch collaboration with Audemars Piguet, with Jaeger-LeCoultre and Tissot placing second and third. Digital engagement across the soft-luxury sector increased 18% year over year, marking a fifth consecutive quarter of acceleration, as Google searches rose 47%, website traffic grew 39%, and Chinese Baidu activity remained down 18%. Excluding unusually strong Google search figures, overall online activity still improved by 7 percentage points from the first quarter, supporting expectations for continued luxury demand recovery led by the US and South Korea.
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Capri's Turnaround Gains Traction After Versace Sale, Return to Profitability
Capri Holdings' turnaround is showing signs of progress after the company sold its Versace brand to Prada for $1.375 billion, returned to profitability, and strengthened its balance sheet through debt reduction and positive free cash flow. In its fiscal 2026 fourth quarter, Capri reported earnings of 22 cents per share, a sharp improvement from a loss of $4.90 per share a year earlier, while revenue from continuing operations, which excludes Versace, totaled $796 million, down 3.7% year over year. The company expects revenue growth to return in fiscal 2027, with earnings per share projected to rise 40% to $2.15, as Michael Kors improves profitability and Jimmy Choo returns to the black. Despite these improvements, Capri shares remain down roughly 65% from the highs reached after the Tapestry merger announcement and trade at a substantial discount to peers such as Tapestry and Ralph Lauren, with a price-to-sales ratio of 0.6 compared to 4.3 and 3.0, respectively. Wall Street maintains a consensus Hold rating on the stock, with an average 12-month price target of $24.79, implying roughly 30% upside from current levels.
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Versace CEO Emmanuel Gintzburger Has Exited
Emmanuel Gintzburger has exited Versace, WWD has learned. Gintzburger joined the Italian brand as chief executive officer in 2022 and recently led the house through its acquisition by the Prada Group and the appointment of Pieter Mulier as its chief creative officer. Prada confirmed the resignation of Gintzburger effective June 23, stating that information about the new governance will be announced in due course. Gintzburger was previously CEO of Alexander McQueen and was tapped to run Versace by the brand's previous owner, Capri Holdings. Prada acquired 100 percent of Versace from Capri Holdings for 1.25 billion euros in April last year, and Lorenzo Bertelli, head of CSR at the Prada Group, was named executive chairman of Versace in December.
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