'A more cautious lens on luxury': RBC cuts LVMH and Burberry

Burberry

22/09/2026 11:04

** RBC sees luxury sector's mid-term consensus estimates as "overly optimistic" assuming accelerating revenue growth and margin expansion which are unjustified by current momentum
** It notes macroeconomic and luxury demand conditions have softened in the third quarter with mixed data points in China and a potential US moderation
** The brokerage downgrades French luxury goods giant LVMH LVMH.PA and British fashion house Burberry BRBY.L to "sector perform" from "outperform", viewing the 2027 luxury outlook through a "more cautious lens"
** RBC cuts its 2027 earnings per share estimates below consensus for LVMH and Burberry, by 9% and 7% respectively, as creative renewal is unlikely to bring expected growth
** "We may see further consensus FY27E downgrades across our luxury coverage, which could result in another leg down for luxury stocks, in the absence of more favourable macro translating to more dynamic demand growth," says RBC in a note
** It prefers Italian sports car maker Ferrari RACE.MI and Swiss luxury group Richemont CFR.S while warning of further earnings revisions pressure despite low sector valuations

(Reporting by Clement Martinot)
((Clement.Martinot@thomsonreuters.com;))