Dive Brief:
- HSBC analysts predicted that Q2 luxury earnings would show a poor start and a potentially strong finish, according to a July 2 note from the firm’s Global Luxury Goods equities division.
- The note forecasted that Burberry, which reports first quarter FY26 earnings on July 18, and LVMH, which reports H1 2025 results on July 23, will both be down for their respective periods. Meanwhile, Hermès, Richemont, Moncler and Prada, all of which will report H1 results this month, are expected to see year-over-year gains.
- This is “a sobering time for luxury sales,” analysts said. They noted that Liberation Day tariff announcements stalled confidence, markets and the U.S. dollar in April, but they predicted May and June would reveal some recovery.
Dive Insight:
The second quarter of 2025 is “shaping up to be an even more challenging quarter for our luxury coverage overall, with likely a sequential slowdown for most,” the analysts said in their July note.
However, the analysts said Burberry had moved past some of the struggles plaguing other companies and gained market share. As a result, HSBC predicted Burberry will report flat organic retail comps for the second quarter of the calendar year (and first quarter of its fiscal year), compared to a 6% organic decline in Q4, which ended in March.
Analysts attributed some of the gains to Burberry’s successful marketing campaign. “It is always Burberry weather” and said the tagline helped to “defeat the argument that Burberry is a seasonal business.”
For LVMH’s upcoming revenue report, analysts said they expect the company’s organic sales to be down 7% for the second quarter compared to a 3% organic decline (2% reported) in Q1, with a negative performance in almost all the divisions except Selective Distribution.
In LVMH’s Fashion & Leather division, HSBC analysts said they expect Q2 organic sales to decline 11% year over year.
In a separate note published on June 12, the same HSBC analysts said growth in all luxury segments was “an hourglass shape,” with beauty, soft luxury and jewelry outperforming at the very high end and in very accessible goods, while the middle was being squeezed.
Overall, analysts said in their July note that they expected sales growth in the luxury sector to sequentially slow down in the second quarter, compared to a 0.4% increase in Q1.
However, Hermès and Prada Group are both likely to see continued growth, said analysts, with Prada Group in particular benefitting from “consistency in terms of product pipeline.”
Analysts noted that Q2 is not a meaningful quarter in terms of sales for outdoor winter luxury brand Moncler, but the company could still expect to see a 2% organic increase in sales. Increases are expected to be more significant at Moncler-owned Stone Island, with sales up 8.4% organically.
Jewelry could continue to drive group organic sales growth at Richemont, which analysts predicted would post a 4% increase for the first quarter of fiscal 2026, which ended in June. Nonetheless, the luxury conglomerate’s watch division is expected to remain under pressure and post an organic sales decline of 12% for the period.
