(BFM Stock Exchange) – The sector has suffered since the start of the year, most luxury groups having seen their income falling back in the second quarter. The second half should display an improvement in the activity, helped by a more lenient comparison base in China, in particular. But this may not be enough to trigger a real resumption of the sector.

For the moment, the 2025 vintage turns out to be bitter for luxury groups on the stock market. The three major representatives of the sector on the CAC 40 evolve clearly in the red, LVMH abandoning 25.1% since January 1, Hermès 10.7% and Kering 11.2%.

The fall is obviously not limited to three -color groups. In Milan, Salvatore Ferragamo lost 33% over the whole of 2025 while Brunello Cucinelli and Moncler fell 8.4% and 9.4% respectively. In Hong Kong, Prada plunges 31%. Even Richemont, owner of Cartier and Van Cleef & Arpels, is no exception to the ambient gloom, with a withdrawal of 4.4% in Zurich.

The Swiss group took advantage of its positioning on the “Hard Luxury” (watchmaking, jewelry) which suffered much less than the “soft luxury” (clothes, leather goods), which allowed it to display higher growth than those of its rivals. But its margins now face the high prices of gold and unfavorable exchange effects.

The only real exception in the sector remains Burberry (+12.2% since January 1) the group that has given first convincing signs on its recovery. Let us recall, however, that the British label was starting from far away, with a course divided by more than two between the end of 2022 and the end of 2024.

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“Greedflation” and changes in exchange

The luxury sector suffers from a set of unfavorable winds, with in particular the economic uncertainty caused by customs duties and the unfavorable development (in the spring at least) of the American markets, which weighed on demand. As François-Henri Pinault, the director general of Kering, had recalled in May, consumer spending in the United States is very correlated with the good health of Wall Street, regardless of the “social class” of consumers.

“The macroeconomics weighs, Chinese and American consumers are disinterested, the ‘greedflation’ (exaggerated price increases that luxury brands have passed during the postpandemia recovery) and the lack of innovation abused the sector,” said HSBC in June.

It is superimposed on unfavorable changes in exchange rates for the expenses of tourists abroad. The fall of the dollar in front of the euro led American tourists to reduce purchases of luxury products on the old continent.

The most blatant effect in the figures published by companies in the second quarter, however, observed in Japan. For example, LVMH saw its income drop by 28% in comparable data in the second quarter in this country, Kering by 29% and Richemont by 15%.

Due to the weakness of the Yen, Asian tourists, especially Chinese, traveled in the Japanese archipelago in the first half of 2024 because purchases of luxury products were then much more interesting with the fall of the Japanese currency. A year later, luxury groups faced “a reversal of what happened” in 2024 in Japan, explained the financial director of LVMH, Cécile Cabanis.

A season of the results to forget

The results season, which ended two weeks ago, gave rise to fairly diverse fortunes for luxury groups. LVMH had seen its course increase by almost 4% in the wake of the publication of its half -yearly accounts. If its main division, fashion and leather goods, suffered, with a fall in sales of 9% in data comparable in the second quarter, the group had delivered several reassuring elements, in particular on Chinese demand as well as on its costs.

Conversely, Hermès, despite a robust growth of 9% in the same quarter, was sanctioned (-4.5% in the wake of the publication), the doubt market of an acceleration of its growth in the second part of the year.

Among the other notable reactions, Burberry (+5.6%) had met investors’ expectations when Moncler suffered (-5.8%), particularly affected by the drop in tourist expenses.

“The season for the second quarter of the second quarter of 2025 has been mixed, the performance of stock market prices having been influenced by positioning (of investors, editor’s note) and the feeling (of the market) than by the fundamentals”, summarizes Royal Bank of Canada. UBS notes that all the titles of its coverage have, on average, delivered growth in comparable data close to 0 in the second quarter, a figure which goes to -1% by excluding Hermès.

To a clearer comparison base

What to wait for the second part of the year? Can a resumption of activity occur in this sector where investors are more sensitive to growth dynamics than to the good resistance of margins?

Several companies, such as LVMH, explained that the base of comparison in the third quarter would be easier, especially in China. Even if it is advisable to add, as Cécile Cabanis explained, that the comparison base will become more demanding in the United States over the last three months of the year. In the fourth quarter of 2024, American purchases of luxury products had somewhat left, once the uncertainty about the American presidential election. The impact linked to the fall in expenditure of tourists should also fade.

However, “luxury lacks fundamental support for demand and, although the third quarter of 2025 can display a sequential improvement (from one quarter to the other, editor’s note) of trends (with an easier comparison base), without inflection of underlying demand, we have trouble seeing how the sector could work in a lasting way”, warns Royal Bank of Canada.

“The limited visibility on the trends in the third quarter, despite a much more favorable comparison base, as well as the persistent difficulties linked to exchange rates, seem to have delayed the prospect of a revival of dynamism of the results (…),” said UBS.

The Swiss Bank does not think that luxury suffers from a long -term growth failure. But in the short term, “we do not plan a recovery before the second half of 2026 due to a combination of sectoral and macro-political problems”, argue his analysts.

Bernstein is a little more optimistic. The design office also believes that lightening comparison bases on the second part of the year will not be enough to revive the flame of the sector. For Bernstein, the main concern for the second half of 2025 remains the “Value for Money”, that is to say the question of whether consumers believe they have enough for their money. In previous notes, the design office pointed out that the question arose in view of the price increases that luxury houses have passed from the pandemic as well as the general fatigue which is observed in different brands which are very famous.

News expected in September October October

However, Bernstein says he is “constructive” for the second semester, because the marks “do not remain their arms crossed” and activate to restore momentum to the desirability of their products. “Measures seem to be underway to remedy these problems. An unprecedented injection of new products scheduled for September 2025 will allow us to respond simultaneously to concerns related to ‘mix’ and desirability,” develops the design office.

In a note published Wednesday, Bank of America, notes that “the first data for July indicate a less unfavorable tendency of income, which could continue throughout the quarter given a more favorable comparison base”.

The Bank observes that luxury spending has recovered a bit in July in the United States, as well as tourism spending in Europe, the decreases fall by 6% over the month against a drop of 12% in the second quarter. In addition, the establishment estimates that the fall in tourist spending in Japan should be less pronounced in the third quarter, with an improvement of 10 percentage points (after a drop of 21% in the second).

“However, a sustainable improvement in luxury sector revenues is based on an increase in volumes, whose visibility is still limited,” warns Bank of America. “We will wait for the fashion shows of September-October to determine whether novelty, creativity and drop in prices are sufficient to support a recovery in 2026,” she concludes.

Catalysts

Beyond the general trends in the sector, investors must also seek catalysts specific to each company. This is what led, in early July, Goldman Sachs, to go to purchase on LVMH. The American bank notably quoted the launch of the Louis Vuitton beauty product range (“La Beauté Louis Vuitton”) planned in the fall. Or the new “growth era” at Dior Couture “with its new artistic director”, Jonathan Anderson, who presented his very first parade last June.

Goldman Sachs noted that the first feedback from the specialized press had been favorable. “Jonathan Anderson worked for 11 years at Loewe (within the LVMH fashion and leather goods division), where sales increased, according to estimates, from 200 million euros to around 1.5 billion euros,” wrote the bank.

Apart from this particular example, UBS, for its part, recommends titles which currently display solid growth while continuing to invest, citing Richemont, Prada or Brunello Cucinelli, or companies that show signs of stabilization, like Burberry.

For his part, Royal Bank of Canada also advises buying the Burberry action. The Canadian Bank recommends, moreover, LVMH, seeing an attractive “yield” couple attractive on the title, as well as Hermès, for its defensive qualities and its valuation which has become more affordable. Bernstein, for his part, is “outperformance” equivalent to “buy” on five titles (Richemont, Burberry, LVMH, Hermès as well as the Swiss watchmaking group Swatch).

Note that American customs duties on imports of European luxury products may have limited impacts.

Brussels and Washington agreed on overall customs from 15% last July. LVMH’s financial director Cécile Cabanis told journalists that such a rate would constitute “a good result” which would be positive for the “mood” of customers, according to proported by Reuters (the leader had then expressed a few days before the official announcement).

Kering’s financial director, Armelle Poulou, had told analysts that these customs surcharges were “manageable”, in particular via price increases. Kering had increased in the second quarter and “a second wave” could take place on the second part of the year, the leader had explained.

In a note published in July, UBS wrote that brands will have to raise their price of around 2% in the United States or 1% worldwide to neutralize the impact on their operating profit, which is also low enough among French groups (1% for Hermès, 3% for LVMH and 6% for Kering, according to the Swiss Bank).