LIVE MARKETS-Luxury earnings might slow down this quarter
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LUXURY EARNINGS MIGHT SLOW DOWN THIS QUARTER
European luxury has been a laggard this year, despite Europe attracting inflows and managing a rare outperformance against Wall Street. First quarter results were disappointing and this quarter might not be any better.
"We continue to see negative earnings revisions across most of our luxury coverage... Recent datapoints and commentary imply no improvement and potential deceleration in 2Q25," says RBC.
The Canadian bank suggests to focus on names like Hermes HRMS.PA for its defensive revenues and LVMH LVMH.PA for its quality portfolio amid depressed sentiment. It is constructive on Burberry BRBY.L for its turnaround strategy.
RBC forecasts a 4% organic revenue growth for the luxury sector in 2025. This is below the long-run historical average growth of 7-8%. By region, it estimates 5% growth in Europe, North America and Japan, and 1% growth in Asia Pacific.
"1H25E margin outcomes and likelihood of 2H25E revenue improvement are the big topics," it notes.
(Danilo Masoni)
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