Barclays delays luxury earnings recovery on economic headwinds

Salvatore Ferragamo

02/05/2025 10:00

** Barclays says it is pushing a potential luxury sector earnings turnaround from the second half of 2025 to an undetermined later timeframe as it cuts estimates to better reflect economic headwinds

** "The downgrade cycle is thus not over," the broker says as the U.S. tariffs newsflow leads to feeble GDP growth forecasts, dwindling consumer sentiment, and recession fears in America and Europe

** Price increases are likely as companies eye passing on tariff costs to U.S. customers, even as margin implications look to escape worst-case scenario predictions with negotiations ongoing, Barclays says

** It cuts European behemoth LVMH LVMH.PA to "equal weight" from "overweight" and slashes its PT by 27% to EUR 550 with limited positive catalysts in sight

** The broker says recovery at Kering PRTP.PA, Burberry BRBY.L, and Ferragamo SFER.MI is even more at risk against this backdrop, keeping its "underweight" on all three stocks

** Hermes HRMS.PA and Richemont CFR.S, both "overweight"-rated, remain Barclays' darlings as it says "high-quality" names will continue to provide some insulation in an uncertain environment

 (Reporting by Jakob Van Calster)

 ((Jakob.vancalster@thomsonreuters.com))