Profit margins at the world’s largest luxury goods companies have almost halved in just three years, prompting calls for more disciplined cost management that preserves brand equity while restoring profitability.

Research from supply chain consultancy Inverto, part of Boston Consulting Group, shows that the average operating margin across the 20 biggest luxury groups has fallen from 24 per cent in 2022 to 13 per cent today.

Half of those companies have seen margins decline over the period, while five are now operating at a loss.

Analysts say the slowdown in global demand, particularly in key markets such as China and the US, has combined with rising input and operational costs to squeeze profitability in a sector long associated with premium pricing power.

Traditionally, luxury houses have adopted high-cost approaches across their entire business, including areas not directly tied to product craftsmanship or customer experience, such as IT, logistics and back-office functions.

Daniela Klotz, managing director at Inverto, argues that meaningful savings can be achieved in these “indirect categories” without diluting brand identity.

“In indirect spend areas, systematic management can unlock savings of 8 to 10 per cent, or more, within six to twelve months,” she said.

One example is software licence optimisation. Many global brands overpay for unused or over-specified licences. “One client reduced software spending by 15 per cent through a rightsizing strategy,” Klotz noted.

Similarly, marketing and visual merchandising often incur heavy centralised production and international shipping costs to maintain brand consistency. By enabling approved regional suppliers to produce materials to centrally defined specifications, companies can preserve visual standards while reducing logistics and production costs.

“With the right strategy, spend in this category can fall by up to 30 per cent,” Klotz said.

Klotz said luxury brands need a clear, data-driven assessment of which elements of their supply chains are truly essential to maintaining brand equity and which can be streamlined.

Once that framework is established, artificial intelligence can help identify operational inefficiencies. AI tools can optimise transportation routes and shipping schedules, cutting freight costs while maintaining delivery standards.

In fashion, AI forecasting models can also help reduce overproduction, a persistent challenge when balancing sizes, colours and seasonal demand. Improved forecasting can limit discounting and wastage, directly protecting margins.

The luxury sector’s long-standing reliance on premium pricing and brand prestige is now being tested by softer consumer sentiment and more cautious spending.

Klotz argues that protecting margins in the current environment requires sharper focus. “With a clear cost management strategy and a disciplined approach to what is essential and what is not, fashion and luxury brands can significantly improve their margins,” she said.

As investor scrutiny intensifies and growth moderates, the sector’s next phase may depend less on headline price increases and more on operational excellence behind the scenes.

Jamie Young

Jamie is Senior Reporter at Business Matters, bringing over a decade of experience in UK SME business reporting.
Jamie holds a degree in Business Administration and regularly participates in industry conferences and workshops.

When not reporting on the latest business developments, Jamie is passionate about mentoring up-and-coming journalists and entrepreneurs to inspire the next generation of business leaders.

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Goldman Sachs plans to remove DEI hiring standards for its board of directors, The Wall Street Journal reported Monday.

The company had removed a requirement for board diversity on companies it was taking public last year, but now plans to remove DEI language in the criteria for its own board members this month. The board’s governing committee evaluates potential candidates based on four criteria, one of which is a more traditional understanding of diversity, encapsulating viewpoints, background, work and military service.

That section also has “other demographics” tagged on to the end, referring to race, gender identity, ethnicity and sexual orientation, according to the Journal. The board now reportedly plans to remove reference to “other demographics.”

The expected change comes after the National Legal and Policy Center, a conservative nonprofit that owns a small stake in the bank, requested the change in September, according to the Journal.

HEGSETH ENDING MILITARY EDUCATION TIES WITH HARVARD AMID TRUMP FEUD: ‘WE TRAIN WARRIORS, NOT WOKESTERS’

Goldman Sachs is rolling back its DEI hiring standards for its board of directors. (Getty Images / Getty Images)

Goldman Sachs struck a deal with the group under which the board would make the change of its own accord and the NLPC would not submit a formal request circulated to shareholders ahead of the company’s annual shareholder meeting later this year, people familiar with the matter told the outlet.

The change comes as part of a wider rejection of DEI policies thanks in large part to President Donald Trump‘s return to the White House last year.

Trump moved quickly to drop the hammer on DEI, signing an executive order on day one titled “Ending Radical and Wasteful Government DEI Programs and Preferencing,” which directed federal agencies to stamp out DEI-style programs across the federal government. The following day, Trump signed a second order aimed at “restoring merit-based opportunity,” including changes for federal contracting and related compliance.

CORPORATE AMERICA HAS DECIDED THAT DEI NEEDS TO DIE

A view of the Goldman Sachs stall on the floor of the New York Stock Exchange.

“We’ve ended the tyranny of so-called Diversity, Equity and Inclusion policies all across the entire federal government and indeed the private sector and our military. And our country will be woke no longer,” Trump said in March.

The administration has also targeted DEI initiatives at America’s elite universities, seeking new funding agreements with Columbia University, Harvard and others.

Harvard has been a main target of the Trump administration’s attempt to leverage federal funding in order to crack down on antisemitism and “woke” ideology.

In December, lawyers for the Trump administration appealed a judge’s order to restore $2.7 billion in frozen federal research funding to Harvard University.

Harvard banners hang outside Memorial Church on the Harvard University campus in Cambridge, Massachusetts. (Getty Images)

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Harvard sued the administration in April over its attempt to freeze the federal funding and argued in court that the actions amounted to an unconstitutional “pressure campaign” to influence and exert control over elite academic institutions.

Fox News’ Emma Colton contributed to this report.

Octopus Energy Generation is investing nearly $1bn in Californian clean technology projects, deepening its exposure to the US energy transition and accelerating plans to deploy $2bn across the country by 2030.

The funding, channelled through Octopus-managed funds, spans carbon removal, heat battery technology and solar-plus-storage infrastructure, reinforcing the company’s strategy of backing next-generation decarbonisation assets in advanced markets.

Octopus will support two California-based carbon removal companies focused on grassland restoration and reforestation, converting degraded land into high-quality carbon-absorbing assets. Several large technology firms have already agreed to purchase carbon credits from the projects, providing long-term revenue visibility.

The investor will also back heat battery technology developed in the Bay Area, aimed at decarbonising hard-to-electrify industrial processes. The systems are designed to replace fossil-fuel boilers with renewable-powered thermal storage, cutting emissions in sectors that have proven difficult to transition.

As part of the investment drive, Octopus is acquiring a solar and battery storage project in California. The site is expected to be fully operational by July 2026, helping convert the state’s abundant solar resource into dispatchable, low-cost electricity.

The announcement builds on earlier North American investments, including backing floating offshore wind developer Ocergy and solar projects in Ohio and Pennsylvania.

The move comes as Octopus expands its international footprint while maintaining close ties to the UK market. Britain’s clean energy economy grew three times faster than the wider economy in 2024, according to CBI data, and Octopus said overseas investments would ultimately support UK returns and expertise.

Zoisa North-Bond, chief executive of Octopus Energy Generation, said California’s policy environment and technology ecosystem made it an attractive long-term partner.

“Octopus and California are both leading the way in clean energy innovation,” she said. “With supportive policy and world-class entrepreneurship in and around Silicon Valley, it’s an ideal place to back investments that will benefit the UK economy.”

California currently generates more than two-thirds of its electricity from clean sources and aims to reach 100 per cent by 2045, positioning it as one of the world’s most ambitious energy transition markets.

The announcement was made during a visit by the Governor of California to Octopus’s London headquarters, underscoring the growing transatlantic collaboration in clean technology and infrastructure investment.

Jamie Young

Jamie is Senior Reporter at Business Matters, bringing over a decade of experience in UK SME business reporting.
Jamie holds a degree in Business Administration and regularly participates in industry conferences and workshops.

When not reporting on the latest business developments, Jamie is passionate about mentoring up-and-coming journalists and entrepreneurs to inspire the next generation of business leaders.

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Nominations have opened for the 2026 edition of the Black British Business Awards (BBBAwards), marking the 13th year of a programme dedicated to recognising exceptional Black British talent across the UK’s corporate and entrepreneurial landscape.

With nearly 500 professionals and entrepreneurs already honoured since its launch, the awards continue to serve as a prominent platform for celebrating leadership, innovation and impact across British business. Organisers are calling on companies to put forward visionary leaders, high-performing executives and entrepreneurial achievers whose work is shaping industries nationwide.

This year’s programme expands to nine categories, offering broader recognition than in previous years. The STEM category has been split into Science & Engineering and Technology, while Consumer & Luxury now spans Fashion & Beauty, FMCG and Retail & Hospitality. These sit alongside Arts & Media, Entrepreneur, Financial Services and Professional Services.

From the category winners, one overall Black British Business Person of the Year will be selected, joining a distinguished alumni that includes leaders from S&P Global, Microsoft and Netflix.

The 2026 theme, #SHINE, is designed to celebrate visibility, brilliance and measurable impact. BBBAwards chair and executive founder Dr Sophie Chandauka MBE said the theme reflects the importance of authentic growth and collective progress.

“#SHINE recognises those who illuminate pathways for others, drive measurable change and lead innovation across industries and communities,” she said. “When individuals have a platform to grow and shine authentically, collective success follows.”

Nominations close on Wednesday 11 March, with finalists and winners to be celebrated at a ceremony on 9 October at Hilton Park Lane. The event is expected to draw senior business leaders and influencers from across the UK economy.

Sponsors for 2026 include Baker McKenzie, Morgan Stanley, Ralph Lauren and S&P Global.

Last year’s Black British Business Person of the Year was Yvonne Kunihira-Davidson, managing director and EMEA head of tax solutions at S&P Global Market Intelligence. The 2025 Impact Award went to Anne Mensah, vice-president of UK content at Netflix, while the inaugural Icon Award honoured Kanya King CBE, founder and chief executive of MOBO Group.

Organisers say the awards remain a vital forum for recognising excellence and ensuring that Black British professionals receive the visibility and recognition their achievements merit.

Amy Ingham

Amy is a newly qualified journalist specialising in business journalism at Business Matters with responsibility for news content for what is now the UK’s largest print and online source of current business news.