Based on recent earnings releases from posh fashion purveyors including LVMH and Burberry, high-net-worth individuals appear to be cutting back on luxury items.
So does that mean the monied set are reducing their investment purchases as well? Financial advisors planning their own discretionary spending need to know.
LVMH (Ticker: LVMHF), the French company behind Louis Vuitton and Dior, saw its revenue fall by 2 percent and profit from recurring operations drop 14 percent year-over-year, according to its quarterly report released last month. Elsewhere, the iconic British luxury brand Burberry said yesterday its sales were down 6 percent in the first three months of 2025, and it plans to eliminate 1,700 roles globally by 2027.
Meanwhile, sales at fashion giant Gucci fell 25 percent in the first quarter of the year, as reported last month by its French corporate parent, Kering.
Put it all together and it seems sensible to deduce that high-net-worth (HNW) individuals are tightening their purse springs, or, at the very least, altering their consumption habits, due to tariff or recession fears. As a result, wealth managers may be entering a new environment as well when it comes to managing their most moneyed clients.
Or maybe not.
Dave Alison, president and founding partner of Prosperity Capital Advisors, for one, said thus far he is not seeing changes in the spending patterns of his HNW clients.
“While the tariffs drove a lot of uncertainty and caused market losses, most of our HNW clients stayed the course with their investment plan, and some even doubled down to buy the dip and since the market has mostly rebounded, they have been rewarded and I believe their confidence in spending hasn’t shaken due to the fact that the market drawdown was so short lived thus far,” Alison said.
Elsewhere, Samuel Diarbakerly, founder of Generation Capital Advisors, said his clients that have had their income negatively impacted by the tariffs have “absolutely tightened their belts” around luxury spending.
“We have only seen a pull-back in spending in clients that have income sources related to production in China or highly targeted countries. With the uncertainty of where the chips will fall, we are advising the clients be conservative,” Diarbakerly said.
In the meantime, Diarbakerly said his clients have not shied away from buying more stocks and bonds.
“The volatility has provided an excellent opportunity for our clients to find high quality individual stocks such as Broadcom (Ticker: AVGO), that was trading a deep discount greater than the market. At Generation Capital, our clients are prepared to continue to deploy capital if we have another tariff related pullback, especially as bonds have not been a viable investment for many of our clients,” Diarbakerly said.
Moving on, Jeff Erickson, managing director of investments at Callan Family Office, said that aspirational buyers are far more impacted by the sticky high prices and tariff concerns in the luxury goods market than HNW individuals. In his view, they are less willing to stretch financially to make these purchases in this environment and, along with disappointing sales to increasingly strapped Chinese tourists, help explain the fall-off in luxury product sales.
As it relates to his clientele, Erickson said Callan Family Office has not seen a decline in discretionary spending or investments. Travel for vacations and spending on big ticket items has also not fallen in a meaningful way, according to Erickson.
“In general they are nervous about the rapid pace of government policy change, but they are sticking with their long-term investment plans and asset allocation,” Erickson said.
Finally, Jim Carroll, senior wealth advisor and portfolio manager at Ballast Rock Private Wealth, believes the recent declines in global luxury markets do indeed contribute to fears of a potential recession. His perspective is that the major global luxury brands heavily rely on European and Asian markets that have experienced weakening economic conditions that have not yet been seen in the United States.
“Geopolitical uncertainties and the recent ‘tariff tantrum’ have caused our US clients to pull back on discretionary spending but have generally not changed their perspective on investment strategy. Some clients have seen the recent downturn as an opportunity to increase investment exposure while others are taking a wait and see attitude to additional deployment of capital,” Caroll said.
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