Luxury stocks have lost $240 billion in recent months. For some analysts, this is just the beginning. Others are more confident, but the slowdown in consumption by wealthy Chinese could be felt further in the coming months. There are analysts who are betting on Kering shares (expecting a resurgence of Gucci) and those who want to avoid aspirational consumers, especially if they are Chinese. In short, a scenario that is not at all reassuring. By La Conceria.

Luxury lost 240 billion

As Bloomberg writes, analysts are cutting profit forecasts for luxury companies as they consider it increasingly difficult for a trend reversal to occur by 2024. Luxury stocks, with a few exceptions, continue to suffer on the stock market. “This year is more volatile and more painful because it comes after excessive growth,” underlines Flavio Cereda of Gam, referring to the post-pandemic boom in consumption. Cereda hopes that next year sales can grow at least “mid-single-digit.” A level, according to the analyst, that represents the long-term reference for the sector.

For some it’s just the beginning

Some are less optimistic. Zuzanna Pusz, an analyst at UBS, believes that the luxury outlook is “slower for longer” or “slower and will take longer”. Pusz, like other colleagues, has reduced estimates for organic growth in luxury sales for the second half of 2024 and for 2025. The consensus is that “the sector is entering its own cycle, after a few boom years with high prices”.

Greater (possible) palatability?

Ashley Wallace of Bank of America also says that consensus estimates for the second half of the year may be too high. Jelena Sokolova, an analyst at Morningstar, sees the bright side of the issue, because she argues that by downsizing, luxury will become more attractive to attract investments. The same analyst would bet on Kering and the relaunch of Gucci. Yesterday, however, the Kering stock, in the wake of negative ratings from Barclays, fell further, reaching its lowest level in the last seven years. Various analysts predict that Gucci will record organic growth of 5% in fiscal year 2025: Barclays instead believes that the brand risks remaining in negative territory next year as well. Cereda, unlike Sokolova, wants to avoid focusing on the aspirational consumer and especially the Chinese one. Therefore, focus on Hermès. Finally, Edouard Aubin of Morgan Stanley indicates LVMH and Richemont as particularly vulnerable to the slowdown in China.