65 percent investors expect a decline in valuations in the fashion and luxury goods sector – according to the “Fashion & Luxury Private Equity and Investors Survey 2025” report prepared by the consulting company Deloitte.
It was reported that after a period of strong growth and record investment activity, the fashion and luxury goods industry is entering the stage of stabilization and correction of expectations. In 2024, the industry recorded 333 mergers and acquisitions, 7%. less than a year earlier.
The biggest declines were in the premium automotive sector
The largest declines in profitability were visible in the segments of luxury cars, jewelry, watches and private jets, where EBITDA margins decreased by approximately 10 percent on average. Despite the general slowdown, as many as 90 percent investors are declaring their interest in investing capital in this sector this year, recognizing its resilience and long-term growth potential.
It was indicated that Europe remains the center of global investment activity in the Fashion & Luxury segment – 75 percent respondents indicated it as the direction of capital investment with the greatest potential in the near future. North America came in second place (23%), with only 2% considering other parts of the world. respondents.
China, considered a development market with great potential just a few years ago, is losing importance due to weaker economic dynamics and growing trade barriers. Their place in investors' strategies is increasingly being taken by India, Japan and South Korea – countries where the luxury infrastructure is rapidly developing and the number of wealthy consumers is growing.
“The global fashion and luxury goods market is gradually entering a phase of more sustainable growth. In the current economic uncertainty, not only the rate of return is crucial, but above all the resilience of brands and their ability to adapt to new conditions. Decisions on allocating capital increasingly take into account regulatory and geopolitical risks, which favors the concentration of activity in regions with greater stability,” said Dorota Cudna-Sławińska, partner, leader of the Strategy portfolio in Poland and Central Europe, Deloitte, quoted in the press release.
“However, this selectivity does not mean stagnation – on the contrary, it opens space for innovation and the development of new business models in mature markets,” she added.
Customs, customs and more customs. This is the biggest worry
Globally, investors indicate that the greatest threats to the development of the sector remain trade barriers (23%), decreased consumer confidence (22%) and political instability (20%). These factors influence both current financial decisions and long-term expansion strategies and operating models of companies in this industry.
It is stated that in 2024 the mergers and acquisitions market in the fashion and luxury goods industries has slowed down after recent years of dynamic growth. 333 M&A transactions were registered there, which is 25 fewer compared to 2023. The greatest investor involvement was visible in the hotel sector (43.5% of all transactions), which again confirmed its attractiveness.
Second in order (40.2%) were personal luxury goods – including, among others: clothing, accessories, cosmetics and perfumes. The strongest decline in the number of mergers and acquisitions was recorded in the clothing and accessories segment (-20), while an increase in the number of acquisitions compared to last year was recorded in the cosmetics and perfumes (+13) and furniture (+10) industries. Geographically, the largest increase in the number of transactions occurred in Europe, where 14 more agreements were concluded than in 2023. In turn, investment activity in North America and the Asia-Pacific region significantly weakened (there were 23 and 29 fewer investments, respectively).
It was indicated that the average transaction value in 2024 varied significantly depending on the segment. The highest amounts concerned luxury cars, although the average value of repossessions there fell by 52%. Increases were recorded in the clothing and furniture industries, which achieved average transaction values of USD 476 million and USD 88 million, respectively.
Watches and jewelry are still selling
Particularly dynamic growth was visible in the watches and jewelry segment – there the average value increased by as much as 167%, to USD 219 million. In turn, in the cosmetics and perfumes (-62%), hotels (-30%), private jets (-93%) and restaurants (-69%) sectors, average transaction values decreased significantly.
In 2025, investors entered a period of greater caution. 65 percent of them expect a decline in the valuations of companies from the sector, while only 9 percent forecasts growth. For comparison, a year earlier only 25% expected reductions. respondents. Rising financing costs and slower consumption rates encourage market participants to be more selective, although the industry is still perceived as a stable source of value.
“Despite cost pressure, the fashion and luxury goods sector remains one of the most profitable. Most survey participants assume returns on investment (IRR) in the range of 21-30 percent, which confirms the resilience and long-term attractiveness of the industry,” said Mirosław Pazur, partner in the Advisory Department, M&A Corporate Finance, Deloitte.
“We are also observing a change in the structure of portfolios – although smaller companies still dominate, medium- and large-sized entities are becoming more and more important, which may indicate a greater emphasis on stability and predictability of results,” he added.
The luxury goods market is becoming more and more polarized
The richest 0.1 percent consumers are already responsible for 23%. global spending in this segment. This trend highlights the growing importance of individualizing experiences and creating entire ecosystems of services tailored to the needs of a narrow group of the most affluent customers.
At the same time, artificial intelligence is becoming more and more important, as it has a major impact on customer experience – from product design and personalization to after-sales service. Data-driven tools already support brands in demand forecasting, price optimization and inventory management, increasing the efficiency of the entire value chain.
F&L investor portfolios are becoming more diversified. More often, they begin to cover areas complementary to traditional fashion, such as resale, accessories or services supporting the activities of brands. Today, 49 percent declare this type of investment. respondents, while 23 percent focuses on the fashion brands themselves.
In the coming year, as much as 90 percent investors plan to be active in the Fashion & Luxury segment. The most popular are cosmetics and perfumes (25 percent of responses) and the production of clothing and accessories (24 percent). Non-financial factors are also gaining importance, including sustainability, responsible supply chains and brand ethics. ESG is increasingly becoming an element of companies' strategies, with the following industries most willing to invest in it: cosmetics (27%), clothing (17%) and furniture (13%). (PAP Business)
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