After a period of rapid growth and record investment activity, the fashion and luxury goods industry is entering a phase of stabilisation and recalibration of expectations. According to the “Fashion & Luxury Private Equity and Investors Survey 2025” by Deloitte, the sector recorded 333 mergers and acquisitions in 2024 — a 7% decline year-on-year. The sharpest drop in profitability occurred in luxury cars, jewellery, watches and private jet segments, where EBITDA margins fell by an average of around 10%. Despite the overall cooling, as many as 90% of investors still express interest in allocating capital to the sector this year, recognising its resilience and long-term growth potential.
The Global Fashion & Luxury Private Equity and Investors Survey 2025 analyses macroeconomic conditions and consumer financial sentiment, reviews M&A activity by region and fund strategy, and highlights key trends and forecasts for 2025.
Europe remains the world’s leading hub for Fashion & Luxury investment — 75% of surveyed investors identified it as the most attractive destination for capital allocation in the near term. North America ranked second (23%), while only 2% consider other regions. China — once viewed as a high-potential growth market — is losing ground due to weaker economic momentum and growing trade barriers. Its strategic position is increasingly being taken over by India, Japan and South Korea — markets with fast-developing luxury infrastructure and expanding affluent consumer bases.
“The global fashion and luxury market is gradually shifting into a phase of more sustainable growth. In today’s environment of economic uncertainty, what matters is not only the rate of return but above all a brand’s resilience and adaptability. Investment decisions now more frequently account for regulatory and geopolitical risks, favouring stable regions. This selective approach does not imply stagnation — on the contrary, it creates space for innovation and new business models in mature markets,”
says Dorota Cudna-Sławińska, Partner and Portfolio Strategy Lead for Poland and Central Europe at Deloitte.
Key Risks Ahead: Trade Barriers, Consumer Confidence, Geopolitics
Globally, investors point to trade barriers (23%), declining consumer confidence (22%) and political instability (20%) as the top risks for the sector. These factors influence both immediate financing decisions and long-term expansion and operational strategies.
M&A Market Dynamics
2024 marked a cooldown in M&A activity after years of expansion. The sector recorded 333 deals — 25 fewer than in 2023. The hospitality sector attracted the highest volume of transactions (43.5%), reaffirming strong investor appetite. Personal luxury goods — including apparel, accessories, cosmetics and fragrances — followed at 40.2%. The steepest drop was seen in apparel and accessories (-20 deals), while cosmetics & fragrances (+13) and furniture (+10) saw an increase.
Geographically, Europe led the momentum — 14 more deals were recorded versus 2023. Activity weakened sharply in North America (-23) and Asia-Pacific (-29).
Average deal value in 2024 varied significantly by segment. Luxury automotive assets still commanded the highest valuations, though average deal values fell by 52%. Apparel and furniture saw value growth — averaging $476M and $88M per transaction respectively. The most dramatic surge occurred in watches and jewellery, where average deal values jumped 167% to $219M. Meanwhile, cosmetics & fragrances (-62%), hotels (-30%), private jets (-93%) and restaurants (-69%) experienced clear contractions.
Valuation Pressure Ahead
In 2025, investor sentiment has turned more cautious: 65% expect declining company valuations, compared with just 25% a year earlier. Only 9% forecast an increase. Rising financing costs and slower consumer spending are driving more selective capital deployment — though the sector continues to be perceived as a stable value generator.
“Despite cost pressures, fashion and luxury remain among the most profitable sectors. Most investors expect IRRs in the range of 21–30%, confirming the sector’s resilience and long-term attractiveness. We also see portfolio evolution — while smaller companies still dominate, there is growing focus on medium and large-scale assets, signalling a stronger emphasis on stability and predictability,”
notes Mirosław Pazur, Partner, Advisory / M&A Corporate Finance, Deloitte.
Redefining Luxury: The Ultra-Wealthy and AI Drive the Shift
Luxury is becoming increasingly polarised. The wealthiest 0.1% of consumers already account for 23% of global spending in the segment. This trend highlights the rising importance of hyper-personalised experiences and integrated service ecosystems designed for the ultra-affluent.
At the same time, artificial intelligence is rapidly transforming customer experience — from product design and personalisation to post-purchase services. Data-driven tools are already helping brands forecast demand, optimise pricing and manage inventory, enhancing efficiency across the entire value chain.
Investment Outlook: Diversification and ESG in Focus
Investor portfolios in Fashion & Luxury are becoming increasingly diversified. The share of investments extending beyond traditional fashion — into resale, accessories and brand-support services — has risen to 49%, while 23% remain focused purely on fashion brands.
In the year ahead, 90% of investors plan to remain active in the sector. The most preferred segments are cosmetics & fragrances (25%) and apparel & accessories (24%). Non-financial factors are also gaining importance — including sustainability, responsible supply chains and brand ethics. ESG is becoming a strategic pillar — with cosmetics (27%), apparel (17%) and furniture (13%) leading ESG-oriented investments.
