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European Luxury Stocks See a Turnaround Amid High Stakes for Upcoming Earnings
Jan 15, 2025

European Luxury Stocks See a Turnaround Amid High Stakes for Upcoming Earnings

Europes struggling luxury stocks have begun to recover over the last couple of months, adding extra tension to the approaching earnings reports from leading companies in the sector. Speculation about China's economic stimulus possibly boosting spending and former U.S. President Donald Trump's attempts to spur growth have played a role in these developments, with a Goldman Sachs Group Inc. basket monitoring the sector advancing by 13% since mid-November, surpassing the broader market. You can find more details about this from this external source.

The sector is now under pressure to deliver proof that investors' optimism was warranted. "What we really want to see is a sense of increased confidence," said Nick Clay, a fund manager at London investment firm Redwheel. Investors are eager for signs "that suffering has bottomed in the fourth quarter of last year."

The first pivotal test is set for this Thursday when Richemont, the owner of Cartier, reports its sales for the December quarter. The industry's bellwether LVMH is scheduled to release its results on January 28, followed by Gucci owner Kering SA on February 11 and Hermes International SCA on February 14. Burberry Group Plc is set to announce its quarterly sales on January 24.

Recent data from IndexBox indicates an upward trend in luxury goods, echoing early positives like the recent fourth-quarter sales from Italy's Brunello Cucinelli SpA, revealing stable demand at the ultra-wealthy end of the market, where items like EUR17,500 ($18,000) cashmere and vicuna bomber jackets are popular.

The stakes are indeed high for investors, given that France's LVMH is the region's second-largest company by market value, and Hermes and Richemont also hold significant weight in national and regional indexes. A continued rally in the luxury sector could, therefore, bolster European benchmarks, following a challenging year marked by weak sales in China.

These upcoming sales and earnings reports are crucial, reflecting consumer demand during the Christmas shopping season. Richemont, particularly as the owner of Van Cleef & Arpels, is anticipated to benefit from growth in jewelry, which analysts at TD Cowen highlight as offering a "compelling price to value proposition."

The bull case for the stocks leans on executive insights hinting at early signs of market stabilization, although a significant fourth-quarter improvement remains unlikely due to China's property market slump and rising goods and materials costs impacting company margins. "The fourth quarter should still be a bit difficult," remarked Morningstar analyst Jelena Sokolova, noting that "it's hard to see yet the inflection point."

Based on analysts' ratings, companies catering to the wealthiest clientele are more favored, perceived as being more resilient to global economic shifts. LVMH stands out with the highest number of analyst buy ratings at 26, followed by Richemont and Hermes. Investors are also eager to evaluate the performance of brands undergoing revamps, such as Kering's Gucci, Burberry, and Hugo Boss AG.

Overall, any signs of sustained recovery in the luxury industry would be warmly welcomed, especially as valuations for luxury companies have shifted into slightly expensive territory. The allure surrounding brands like Hermes and Prada SpA's Miu Miu might justify their higher price-earnings ratios. "Those luxury companies with very strong brands -- they are where the demand is," said Helen Jewell, Chief Investment Officer of Fundamental Equities EMEA at BlackRock Inc. "Where the brand strength is real, those companies have done incredibly well. It cannot be replicated. They have pricing power."

Source: IndexBox Market Intelligence Platform

  1. 1. INTRODUCTION

    Making Data-Driven Decisions to Grow Your Business

    1. REPORT DESCRIPTION
    2. RESEARCH METHODOLOGY AND AI PLATFORM
    3. DATA-DRIVEN DECISIONS FOR YOUR BUSINESS
    4. GLOSSARY AND SPECIFIC TERMS

  2. 2. EXECUTIVE SUMMARY

    A Quick Overview of Market Performance

    1. KEY FINDINGS
    2. MARKET TRENDS This Chapter is Available Only for the Professional Edition PRO

  3. 3. MARKET OVERVIEW

    Understanding the Current State of The Market and Its Prospects

    1. MARKET SIZE
    2. CONSUMPTION BY COUNTRY
    3. MARKET FORECAST TO 2030

  4. 4. MOST PROMISING PRODUCT

    Finding New Products to Diversify Your Business

    This Chapter is Available Only for the Professional Edition PRO
    1. TOP PRODUCTS TO DIVERSIFY YOUR BUSINESS
    2. BEST-SELLING PRODUCTS
    3. MOST CONSUMED PRODUCT
    4. MOST TRADED PRODUCT
    5. MOST PROFITABLE PRODUCT FOR EXPORT

  5. 5. MOST PROMISING SUPPLYING COUNTRIES

    Choosing the Best Countries to Establish Your Sustainable Supply Chain

    This Chapter is Available Only for the Professional Edition PRO
    1. TOP COUNTRIES TO SOURCE YOUR PRODUCT
    2. TOP PRODUCING COUNTRIES
    3. TOP EXPORTING COUNTRIES
    4. LOW-COST EXPORTING COUNTRIES

  6. 6. MOST PROMISING OVERSEAS MARKETS

    Choosing the Best Countries to Boost Your Exports

    This Chapter is Available Only for the Professional Edition PRO
    1. TOP OVERSEAS MARKETS FOR EXPORTING YOUR PRODUCT
    2. TOP CONSUMING MARKETS
    3. UNSATURATED MARKETS
    4. TOP IMPORTING MARKETS
    5. MOST PROFITABLE MARKETS

  7. 7. GLOBAL PRODUCTION

    The Latest Trends and Insights into The Industry

    1. PRODUCTION VOLUME AND VALUE
    2. PRODUCTION BY COUNTRY

  8. 8. GLOBAL IMPORTS

    The Largest Importers on The Market and How They Succeed

    1. IMPORTS FROM 2012–2024
    2. IMPORTS BY COUNTRY
    3. IMPORT PRICES BY COUNTRY

  9. 9. GLOBAL EXPORTS

    The Largest Exporters on The Market and How They Succeed

    1. EXPORTS FROM 2012–2024
    2. EXPORTS BY COUNTRY
    3. EXPORT PRICES BY COUNTRY

  10. 10. PROFILES OF MAJOR PRODUCERS

    The Largest Producers on The Market and Their Profiles

    This Chapter is Available Only for the Professional Edition PRO

  11. 11. COUNTRY PROFILES

    The Largest Markets And Their Profiles

    This Chapter is Available Only for the Professional Edition PRO
    • United States
    • China
    • Japan
    • Germany
    • United Kingdom
    • France
    • Brazil
    • Italy
    • Russian Federation
    • India
    • Canada
    • Australia
    • Republic of Korea
    • Spain
    • Mexico
    • Indonesia
    • Netherlands
    • Turkey
    • Saudi Arabia
    • Switzerland
    • Sweden
    • Nigeria
    • Poland
    • Belgium
    • Argentina
    • Norway
    • Austria
    • Thailand
    • United Arab Emirates
    • Colombia
    • Denmark
    • South Africa
    • Malaysia
    • Israel
    • Singapore
    • Egypt
    • Philippines
    • Finland
    • Chile
    • Ireland
    • Pakistan
    • Greece
    • Portugal
    • Kazakhstan
    • Algeria
    • Czech Republic
    • Qatar
    • Peru
    • Romania
    • Vietnam

  12. LIST OF TABLES

    1. Key Findings In 2024
    2. Market Volume, In Physical Terms, 2012–2024
    3. Market Value, 2012–2024
    4. Per Capita Consumption, By Country, 2018–2024
    5. Production, In Physical Terms, By Country, 2012–2024
    6. Imports, In Physical Terms, By Country, 2012–2024
    7. Imports, In Value Terms, By Country, 2012–2024
    8. Import Prices, By Country Of Destination, 2012–2024
    9. Exports, In Physical Terms, By Country, 2012–2024
    10. Exports, In Value Terms, By Country, 2012–2024
    11. Export Prices, By Country Of Origin, 2012–2024

  13. LIST OF FIGURES

    1. Market Volume, In Physical Terms, 2012–2024
    2. Market Value, 2012–2024
    3. Consumption, By Country, 2024
    4. Market Volume Forecast to 2030
    5. Market Value Forecast to 2030
    6. Products: Market Size And Growth, By Type
    7. Products: Average Per Capita Consumption, By Type
    8. Products: Exports And Growth, By Type
    9. Products: Export Prices And Growth, By Type
    10. Production Volume And Growth
    11. Exports And Growth
    12. Export Prices And Growth
    13. Market Size And Growth
    14. Per Capita Consumption
    15. Imports And Growth
    16. Import Prices
    17. Production, In Physical Terms, 2012–2024
    18. Production, In Value Terms, 2012–2024
    19. Production, By Country, 2024
    20. Production, In Physical Terms, By Country, 2012–2024
    21. Imports, In Physical Terms, 2012–2024
    22. Imports, In Value Terms, 2012–2024
    23. Imports, In Physical Terms, By Country, 2024
    24. Imports, In Physical Terms, By Country, 2012–2024
    25. Imports, In Value Terms, By Country, 2012–2024
    26. Import Prices, By Country, 2012–2024
    27. Exports, In Physical Terms, 2012–2024
    28. Exports, In Value Terms, 2012–2024
    29. Exports, In Physical Terms, By Country, 2024
    30. Exports, In Physical Terms, By Country, 2012–2024
    31. Exports, In Value Terms, By Country, 2012–2024
    32. Export Prices, 2012–2024

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