HSBC’s gilding is good for luxury: stocks are up. “The time has come to be a little more positive for luxury,” says HSBC analyst Erwan Rambourg. He upgraded his rating from “hold” to “buy” for LVMH and Kering stocks. And he downgraded Hermès to “hold.” But now luxury needs ideas and a revision of prices. And he explains why.
Luxury needs ideas and price revisions
HSBC analysts predict that luxury sales in the second half of 2025 will recover slightly (+2.9%). And in 2026 the sector will return to decent, profitable growth. This is because brands are starting to find solutions after taking on the impacts of their “greed (with rising prices, ed.) and lack of creativity”, which seems to have awakened in the more affordable price ranges. Rambourg believes in a turnaround in China and points out that he doesn’t see a “dire” scenario in the United States, reports WWD.
End of the tunnel
Rambourg, an analyst considered “optimistic” about luxury, is the first to speak of the end of the tunnel. But he is even more surprising in his assessment of the players: “We believe in Dior’s rebound, and we think LVMH’s cost containment will go some way toward defending the margin, and there are also many opportunities for the group to simplify its structure”, HSBC writes, to explain the Arnault family-led giant’s improved rating. Rambourg also believes in the work of Kering’s new CEO Luca de Meo. “We think the likely changes introduced (by de Meo) will reduce the risk” on the stock. While, although Hermès remains above the industry average, HSBC does not expect a consistent acceleration in sales in the second half of 2025.
The middle range
Regarding prices, HSBC itself believes that Coach, Ralph Lauren, Longchamp, and Burberry are apparently benefiting, in a big way, from that segment of the market left empty by premium luxury brands that, by raising prices, are out of reach of many aspirational consumers. They need to be reclaimed, because as Morgan Stanley put it, luxury brands “can no longer play with price leverage and will again have to target the upper-middle class” if they want to grow, says WWD. Il Sole 24 Ore brings us back to reality by pointing out that, beyond today’s rise, luxury stocks are traveling at their lowest in 15 years. And more, the price-earnings ratio is at its lowest in 15 years. For LVMH, its share price is 21 times its earnings, a ratio down from last year. For Kering the price-earnings ratio is at 36.3 times and for Hermès it is 49.5 times.
Photo from Louis Vuitton
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