Luxury Brands Are in a Winner-Takes-All Phase
Hermès captured the lion’s share of growth in luxury-goods spending in the second quarter, while everyone else lagged behind
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Louis Vuitton’s owner designed the medals for the Paris Olympic Games. It can’t be easy to see rival Hermès make off with gold in the second-quarter sales heat.
France’s three most powerful luxury-goods companies reported very mixed second-quarter results last week. On Tuesday, LVMH Moët Hennessy Louis Vuitton said sales in the three months through June rose by a disappointing 1% compared with the same period last year. Gucci owner Kering followed with an 11% fall for the quarter and issued a profit warning. Hermès left its competitors in the dust with a 13% increase in sales over the same period.
Hermès captured more than 100% of the incremental growth in the industry in the latest quarter. Luxury shoppers spent €440 million—equivalent to $477.6 million at current exchange rates—more in the French brand’s stores than they did in the same period of last year. They spent €400 million less on all other luxury brands combined, based on analysis by Bank of America.
This points to a double whammy for high-end brands, which face challenges at both ends of the consumer spectrum they serve.
It has been clear for months that middle-class shoppers in the U.S. and China, the luxury industry’s two most important markets, have reined in their purchasing.
Chinese consumers are saving rather than spending because the value of their homes is falling. Lower-income and middle-income Americans who developed a taste for luxury during the pandemic have pulled back sharply as they have burned through excess savings.
Now, wealthy consumers, too, seem to be getting choosier about which brands they will and won’t buy. Hermès Chief Executive Axel Dumas said there is a “flight to quality” under way in the luxury industry. This shift is benefiting the Birkin handbag maker , which has a reputation for timeless designs.
Chinese buyers in particular are avoiding flashy and logo-heavy brands as worries about the country’s economy and real-estate challenges grow.
Jewellery sales are also holding up as shoppers look for goods that are more likely to hold their value than clothing or handbags. Cartier’s owner Richemont said its jewellery sales rose 4% in the quarter, although the company’s overall sales were weighed down by weak demand for its watch and fashion brands. Kering jewellery labels Boucheron and Pomellato were rare bright spots in its portfolio.
The outlook is harsh for brands such as Gucci and Burberry that are in turnaround mode. The latter issued a profit warning earlier this month and replaced its CEO in an admission that a years-long push to make the British trench-coat maker more exclusive had failed. Its shares have fallen to levels not seen since 2010.
Both brands face an uphill battle to lure shoppers. Neither Gucci nor Burberry is known for the classic designs now in vogue. The labels might also have exacerbated the slump, as the sharp price increases that luxury brands implemented in recent years have sidelined aspirational shoppers.
Luxury stocks are diverging. Shares in Richemont and Hermès have gained 15% and 8% respectively so far this year, with everyone else in the red.
Investors are taking their cue from wealthy shoppers: In troubled times, the most exclusive brands are the safest bet.
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As Australia’s family offices expand their presence in private credit, a growing number of commercial real estate debt (CRED) managers are turning to them as flexible, strategic funding partners.
Knight Frank’s latest Horizon 2025 update signals renewed confidence in Australian commercial real estate, with signs of recovery accelerating across cities and sectors.
As Australia’s family offices expand their presence in private credit, a growing number of commercial real estate debt (CRED) managers are turning to them as flexible, strategic funding partners.
3 minFamily offices are increasingly asserting their dominance in Australia’s private credit markets, particularly in the commercial real estate debt (CRED) segment.
With more than 2,000 family offices now operating nationally—an increase of over 150% in the past decade, according to KPMG—their influence is not only growing in scale, but also in strategic sophistication.
Traditionally focused on preserving intergenerational wealth, COI Capital has found that family offices have broadened their mandates to include more active and yield-driven deployment of capital, particularly through private credit vehicles.
This shift is underpinned by a defensive allocation rationale: enhanced risk-adjusted returns, predictable income, and collateral-backed structures offer an attractive alternative to the volatility of public markets.
The Competitive Landscape for Manager Mandates
As family offices increase their exposure to private credit, the dynamic between managers and capital providers is evolving. Family offices are highly discerning capital allocators.
They expect enhanced reporting, real-time visibility into asset performance, and access to decision-makers are key differentiators for successful managers. Co-investment rights, performance-based fees, and downside protection mechanisms are increasingly standard features.
While typically fee-sensitive, many family offices are willing to accept standard management and performance fee structures when allocating $5M+ tickets, recognising the sourcing advantage and risk oversight provided by experienced managers. This has created a tiered market where only managers with demonstrated execution capability, origination networks, and robust governance frameworks are considered suitable partners.
Notably, many are competing by offering differentiated access models, such as segregated mandates, debt tranches, or tailored securitisation vehicles.
Onshore vs. Offshore Family Offices
There are important distinctions between onshore and offshore family offices in the context of CRED participation:
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Onshore Family Offices: Typically have deep relationships with local stakeholders (brokers, valuers, developers) and a more intuitive understanding of planning, legal, and enforcement frameworks in Australian real estate markets. They are more likely to engage directly or via specialised mandates with domestic managers.
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Offshore Family Offices: While often attracted to the yield premium and legal protections offered in Australia, they face structural barriers in accessing deal flow. Currency risk, tax treatment, and regulatory unfamiliarity are key concerns. However, they bring diversification and scale, often via feeder vehicles, special-purpose structures, or syndicated participation with Tier 1 managers.
COI Capital Management has both an offshore and onshore strategy to assist and suit both distinct Family Office needs.
Impact on the Broader CRED Market
The influx of family office capital into private credit markets has several systemic implications:
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Family offices, deploying capital in significant tranches, have enhanced liquidity across the mid-market CRE sector.
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Their ability to move quickly with minimal conditionality has contributed to yield compression, particularly on low-LVR, income-producing assets.
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As a few family offices dominate large allocations, concerns emerge around pricing power, governance, and systemic concentration risk.
Unlike ADIs or superannuation funds, family offices operate outside the core prudential framework, raising transparency and risk management questions, particularly in a stress scenario.
So what is the answer? Are Family Offices the most Attractive?
Yes—family offices are arguably among the most attractive funding partners for CRED managers today. Their capital is not only flexible and long-term focused, but also often deployed with a strategic mindset.
Many family offices now have a deep understanding of the risk-return profile of CRE debt, making them highly engaged and informed investors.
They’re typically open to co-investment, bespoke structuring, and are less bogged down by institutional red tape, allowing them to move quickly and decisively when the right opportunity presents itself. For managers, this combination of agility, scale, and sophistication makes them a valuable and increasingly sought-after partner in the private credit space.
For high-performing CRED managers with demonstrable origination, governance, and reporting frameworks, family offices offer not only a reliable source of capital but also a collaborative partnership model capable of supporting large-scale deployments across market cycles.
Faris Dedic is the Founder and Managing Director of DIG Capital Advisory and COI Capital Management
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