Luxury goods has been a classic game of two halves in 2023, with a 25% jump at the start of the year giving way to some hefty losses from June onwards.
Those thinking the sector is now ripe for recovery again might want to hold that thought, at least until the second half of 2024, according to predictions from three heavyweight brokers this week.
Deutsche Bank saw little scope for an upturn in the early months of 2024 due to the propsect of a mild US recession and continued stagnant growth in Europe and China.
For the year as a whole, the bank sees aggregated luxury growth of 6% but that will be heavily second-half weighted.
All stocks in its luxury universe get either a downgrade or reduced share price target, with London-listed Burberry rated a hold but with the target slashed to 1,600p from 1,950p.
Barclays bearish on luxury
Another commentator, Barclays, said it sees few catalysts in the short term.
While its note was focused on LVMH, typically the French giant can be seen as a luxury bellwether given its broad range of top-name brands.
One area of uncertainty is monthly US credit card data, which recently returned to negative double-digit falls, while Barclays questioned whether the allure of the Dior brand is also waning a little especially in China.
Canadian bank RBC, meanwhile, said although the cycle might be close to the bottom, it is too early to buy.
'Trough' revenue across the sector is likely to be the first quarter of 2024, it said, but valuations have yet to rebase sufficiently to compensate for potential risk factors heading into the new year.
That is in contrast to sporting goods, for example, which RBC sees enjoying accelerating revenue growth and gross/operating margin.
LVMH and Kering, the Gucci and YSL owner, are its favourites in luxury, and Puma and Nike in sporting goods.