Luxury is going out of style—or is it?

It’s a tough year to be a fancy watch.

We get it—you’re probably playing the world’s tiniest violin for brands like Christian Dior and Hermes, who’ve seen consumers pull back from splashing out on things like $3,000 purses and $500 lipstick tubes (yes, that’s real).

But years of persistent global inflation and an economic crisis in China have taken a toll on the world’s luxury shoppers, who are opting out of pricey jewelry, scarves, and even champagne.

In fact, luxury brands have lost about 50 million customers in just the past two years, and demand doesn’t seem to be picking up any time soon—making it the worst year for some of these brands since the Great Recession in 2009.

Over the past few decades, luxury brands have expanded their reach to upper-middle class shoppers, but prices have skyrocketed so much since the pandemic that this same customer base has dwindled.

Take LVMH, for example. It’s the biggest luxury conglomerate in the world, but it’s down over 21% this year, far underperforming the S&P 500’s gain of 26% over the same time period. Talk about a markdown.

Driving demand from the 0.01%

But if consumers can’t afford fancy bags and makeup anymore, then why is million-dollar car maker Ferrari seeing its profits race ahead?

Ferrari’s stock has zoomed over 27% higher this year even as the rest of the luxury market has lagged. And analysts say it has even further to go.

Unlike some luxury apparel brands that sought mass appeal, Ferrari caters squarely to the uber-wealthy, to which interest rate changes and inflation are more like blips on the radar than the seismic shifts us plebians feel.

Ferrari also has less exposure to China, and its new $3.8 million F80 car is expected to rake in the profits.

The lesson? While mass market appeal helped boost revenue for some stocks, the most luxurious of luxury brands have found success sticking with what works—unless you’re Jaguar, that is.—LB