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This week, French luxury goods stocks<\/strong><\/b> have regained a little color on the Paris Bourse.<\/strong><\/b><\/p>\n <\/p>\n Over the past seven days, shares<\/strong><\/b> in the world leader in the sector, Lvmh,<\/strong><\/b> have risen by 0.97%, Kering by 1.75% and Herm\u00e8s by 3.97%.<\/strong><\/b><\/p>\n <\/p>\n However, the<\/strong><\/b> recently published HSBC<\/strong><\/b> \u201cCruel Summer\u201d survey<\/strong><\/b> does not augur well for the luxury goods sector in the short term, which has been<\/strong><\/b> severely disrupted by the continuing sluggishness of the Chinese market.<\/p>\n <\/p>\n <\/p>\n Based on the performance of eight of the world’s leading luxury brands (Burberry, Herm\u00e8s, Kering, LVMH, Richemont, Swatch, Moncler and Prada<\/strong><\/b>), the bank’s analysts now expect organic growth of 2.8%, instead of the 5.5% initially forecast.<\/strong><\/b><\/p>\n\n <\/p>\n The authors do, however, offer a glimmer of hope: by 2025, they expect a return to luxury goods growth of around 7%.<\/strong><\/b> And this is undoubtedly the longer-term trend on which investors are basing their expectations.<\/p>\n <\/p>\n In the meantime, the HSBC report highlights the polarization of the sector<\/strong><\/b> between the winners and losers of the current period. For the third quarter of 2024, its authors are betting on sharp declines for Gucci (-18%) and Burberry (-10%)<\/strong><\/b>, and on the contrary, strong growth for Herm\u00e8s (+10%) and Prada (+21%).<\/strong><\/b><\/p>\n <\/p>\n This polarization is nothing new. Since the beginning of the year, the major players in the luxury goods sector have performed very unevenly<\/strong><\/b>. Lvmh and Kering<\/strong><\/b> both performed poorly in the first half<\/strong><\/b>. The world leader’s sales fell by 1% and its net profit by 14%, while at Kering, sales plummeted by 11% and operating profit by 42%!<\/p>\n <\/p>\n Herm\u00e8s, on the other hand, continued to sparkle<\/strong><\/b> in the first six months of the year. Sales surged by 15%, while net income rose by 9% to 2.4 billion euros.<\/p>\n <\/p>\n <\/p>\n And yet, over the past six months, none of the three French luxury goods stocks has been spared on the stock market.<\/strong><\/b><\/p>\n <\/p>\n Kering<\/strong><\/b> ‘s share price has fallen by 37.9%<\/strong><\/b> in the last six months, and Lvmh’s by 27.4%<\/strong><\/b>. And even Herm\u00e8s shares are down 17.2%<\/strong><\/b>…<\/p>\n <\/p>\n But if we take a step back and look at a year ago, Herm\u00e8s is the only one to save the day, with an increase of 6.2%.<\/strong><\/b> By contrast, Lvmh fell by 27.4% and Kering by 49%!<\/strong><\/b><\/p>\n <\/p>\n Over five years,<\/strong><\/b> on the other hand, Lvmh has progressed by 65.9%<\/strong><\/b>. Less thanHerm\u00e8s (+215.5%)<\/strong><\/b> but much better than Kering<\/strong><\/b>, which is still in the red (-50.3%)<\/strong><\/b>!<\/p>\n <\/p>\n It’s only by widening the observation spectrum to ten years that Kering finally manages to post an increase (+58.5%)<\/strong><\/b>, albeit well below that of Lvmh (+363.6%).<\/strong><\/b> The decade’s big winner continues to be Herm\u00e8s (+708.2%).<\/strong><\/b><\/p>\n <\/p>\n <\/p>\n Weighed down by its dependence on Gucci,<\/strong><\/b> its flagship House and the Group’s main revenue generator, and on China, Kering is the red lantern<\/strong><\/b> of luxury goods on the Paris Bourse.<\/p>\n <\/p>\n And while Gucci<\/strong><\/b> ‘s revival depends on welcoming<\/strong><\/b> the collections of its new designer, Sabato de Sarno<\/strong><\/b>, who arrives in February 2023 , the Chinese luxury goods market<\/strong><\/b> is unlikely to recover any time soon<\/strong><\/b>, according to market specialists.<\/p>\n <\/p>\n No wonder, then, that the ABC Bourse website<\/strong><\/b> recently stressed that \u201cas long as Gucci does not show tangible signs of recovery, the case will be weakened<\/strong><\/b>\u201d and advised to be \u201ccareful not to over-anticipate the recovery\u201d.<\/p>\n <\/p>\n And it’s no coincidence that, like Kering on the Paris stock exchange, Burberry’s<\/strong><\/b> performance on the London Stock Exchange has fallen off<\/strong><\/b> in recent months. After all, the British fashion house also generates a significant proportion of its sales in China…<\/p>\n <\/p>\n <\/p>\n Burberry<\/strong><\/b> has been described by a British journalist as \u201cthe big sick man of luxury in Europe, along with, to a lesser extent, Kering<\/strong><\/b>\u201d.<\/p>\n <\/p>\n As a result, the illustrious House has just been dropped from the FTSE100 index,<\/strong><\/b> the London Stock Exchange’s flagship index of its top 100 market capitalizations. It’s the first time this has happened in fifteen years!<\/p>\n <\/p>\n Its shares<\/strong><\/b> have, admittedly, lost 75% of their value<\/strong><\/b> since the record high reached in April 2023.<\/p>\n <\/p>\n Herm\u00e8s<\/strong><\/b>, on the other hand , is still very popular<\/strong><\/b> on the Paris Bourse.<\/p>\n <\/p>\n Antoine Belge and Melania Grippo, analysts at BNP Paribas Exane,<\/strong><\/b> recently upgraded the saddler’s rating to the coveted \u201coutperform<\/strong><\/b>\u201d category …<\/strong><\/b><\/p>\n <\/p>\n <\/p>\n \u201cHerm\u00e8s should continue to deliver well above-average growth for an extended period<\/strong><\/b>, thanks to the defensive nature and visibility of its business model\u201d, they stressed.<\/p>\n <\/p>\n Indeed, the Maison de la rue du Faubourg Saint Honor\u00e9 has succeeded in retaining its special aura in the luxury sector, with its timeless leather products and, in particular, its bags sold at stratospheric prices.<\/strong><\/b> At the beginning of 2024, the saddler had even announced round increases in its labels, of up to 15% for certain items. But this did nothing to melt the waiting lists for certain cult models such as the Kelly or the Birkin. To get the bag of their dreams, some are even prepared to pay more for it…second-hand!<\/p>\n <\/p>\n It’s a double win for Herm\u00e8s: the desirability of its products feeds the desirability of its shares<\/strong><\/b>. But its business model is not as easy to copy as a scarf from the famous House.<\/p>\n <\/p>\nA glimmer of hope<\/h2>\n
Widespread stock market decline<\/h2>\n
Kering, the red lantern<\/h2>\n
Burberry dropped from the FTSE100 index<\/h2>\n
Herm\u00e8s, still highly rated<\/h2>\n
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