Luxury goods stocks slumped in Europe, wiping out more than $25 billion in market value after Richemont chairman Johann Rupert said inflation is starting to dent demand across the region.

Behemoth LVMH, recently dethroned by drugmaker Novo Nordisk A/S as Europe’s largest company, fell 3.6 percent to its lowest since early January. That reduced its market capitalisation below $400 billion, far from a peak of more than $500 billion reached earlier this year.

Richemont, the Swiss owner of Cartier and watchmakers including IWC and Vacheron Constantin, dropped 5.2 percent, and Moncler SpA declined 5 percent. Swatch Group AG, Gucci owner Kering SA and Birkin bag maker Hermes International also slid.

“We’ve seen the squeeze,” Rupert, the leader and controlling shareholder of Richemont, told shareholders at the company’s annual meeting in Geneva on Wednesday.

Also on Wednesday, HSBC Holdings Plc published a note cutting estimates and price targets across the luxury space. Analyst Erwan Rambourg attributed the changes to the impact of a recovering euro and a higher cost of growth for the industry in the short term.

It’s a fresh setback for a sector that has been under pressure over the last few weeks on persistent worries about the economic slowdown in China, which accounts for about a fifth of industry revenue. That adds to a reversal in the sales boom when economies started coming out of the pandemic as shoppers, helped by low-interest rates and pent-up savings, splurged on pricey goods.

AlphaValue analyst Jie Zhang expects the sector to “remain sluggish and on a negative trend” until there’s a “material change” in the host of factors affecting its performance.

Wednesday’s rout has further reduced the fortune of Bernard Arnault, LVMH’s controlling shareholder. As of Sept. 5, his wealth had dropped from a mid-July peak of $212 billion to $177.2 billion, widening the gap with Tesla Inc. chief executive officer Elon Musk, according to the Bloomberg Billionaires Index.

By Thyagaraju Adinarayan

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