From Financial Modeling Prep: 2025-03-30 05:56:00

The luxury sector is bracing for a tough earnings season, with BofA forecasting a 1% revenue decline in Q1 2025, falling 3% below consensus estimates. Forward P/E ratios at 21x suggest potential valuation support, but recovery catalysts remain uncertain, especially with China’s economic outlook in question.

Key challenges for the luxury sector include slower organic growth, weak fundamentals, foreign exchange headwinds, and volatility in China’s demand. Earnings estimates are expected to be revised downward due to sluggish consumer demand, with March showing no signs of improvement for a Q2 and H2 rebound.

Richemont, Hermès, and Prada are expected to be growth leaders, while Kering, LVMH, Burberry, and Hugo Boss may underperform. Companies like Kering, Moncler, Hugo Boss, and Burberry could see growth potential later in 2025 if macro conditions improve.

Current valuations suggest downside support, but growth concerns keep volatility high. Revenue growth must return to the historical 6-9% range for sustainable upside, with China remaining a key demand driver. Investors should monitor earnings revisions, China’s economic signals, and currency fluctuations for investment decisions in the luxury sector.



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