Canadian bank RBC says recent data suggests that the luxury sector is stabilising after a tough year, with key trends in China and the US looking more amenable going into 2025.
Favoured stocks at the Canadian bank are French giant LVMH (target €650) for its diversity, scale advantage and sector bellwether status.
Burberry Group PLC (LSE:BRBY) is RBC’s turnround option while Watches of Switzerland Group PLC (LSE:WOSG) is favoured for its US exposure and positioning in 2026, with adidas (target €270) the top pick in sporting goods.
In particular, RBC highlights Watches of Switzerland's website traffic trends inflected positively in October and improved in November (+38%), resuming strong positive trends seen during the Oct ’23 – Aug ’24 period.
Summarising the luxury trends for 2025, RBC expects: Stronger US (improving consumer confidence, PMIs); mixed Europe; and mixed China (better PMIs, consumer confidence, retail sales vs softer CPI, industrial output).
“We are more constructive on luxury vs recent months given US macro improvement," added the bank.
Watches of Switzerland, up 4% at 586p today, has a target of 640p while Burberry, down 1% at 976p, has a 1,000p target.