2024 is expected to be a slow year for growth in Europe’s luxury sector, research has revealed.
Sales during the current year are expected to grow by 6%, which is below trend, analysts at Stifel said.
The slow-down comes after previous years of above-trend growth and is partially caused by a softer-than-expected recovery of Chinese shoppers.
The sector’s difficulties are predicted to be most prominent in the first half, as Stifel says the period will only experience 3% growth in sales.
“Slowing top-line growth should result in near-term margin pressure given operating de-leverage dynamics and moderating pricing,” Stifel said.
Things start to look a bit brighter in the second half, however, with sales touted to jump by 8%.
The London broker added: “Our long-term view on the sector remains more constructive thanks to strong barriers to entry, global scalability, absence of local competitors, global wealth creation dynamics and attractive profitability.”
Valuations at luxury companies look fair in the eyes of the broker and it claims that only a few stocks offer attractive propositions.
Stifel rates Louis Vuitton Moet Hennessy (EPA:MC), Richemont and Hugo Boss a ‘buy’.
Hermes, Kering, Moncler, Swatch Group, Burberry Group PLC (LSE:BRBY) and Watches of Switzerland Group PLC (LSE:WOSG) are all rated a ‘hold’.