Luxury industry earnings reports have been a bit mixed over the past week as the full year 2024 numbers rolled in. Richemont, Ferrari, and Zegna punched above analyst expectations while LVMH was sort of half hot and half cool.
In the midst of these reports, investors’ confidence in a bounceback for the industry this year has turned south. As the below line plot exhibits, our FSW Markets All Luxury equity index came out of the gate quickly in January, but earnings reports combined with fears over the impact of U.S. tariffs on the mostly Europe-based luxury industry has taken its toll. On January 27, the index was up almost 21 percent for the year while bellweather LVMH was up 25 percent. Since then, both have lost about 10 percentage points. This still puts the industry above benchmarks such as the S&P 500 and Euro Stoxx 50, but the trend is not going in the right direction as more earnings reports are released.
Though we are still waiting for more 2024 results, it seems likely that the industry suffered its first negative annual growth rate last year if we exclude years impacted by the GFC and Covid. We continue to forecast a weak H1 2025 followed by a small bounce back in H2. You can find our forecasts here: https://www.fashionstrategyweekly.com/p/lvmhs-full-year-2024-results-point
Looking at the markets intraday, Capri Holdings Limited is down almost 13 percent today after reporting a $547 million net loss for the period of October to December, primarily due to a non-cash impairment charge of $602 million. On an adjusted basis, earnings per share were $0.45, falling short of analyst expectations of $0.66. Revenue decreased by 11.6 percent year-over-year to $1.26 billion, with declines across all major brands: Michael Kors‘ revenue in the Americas declined by 10 percent while Asia experienced a 27 percent drop. Both Versace and Jimmy Choo reported sales declines during the holiday quarter. Looking ahead, Capri forecasts fiscal 2025 revenue of $4.4 billion and fiscal 2026 revenue of $4.1 billion, both below Wall Street estimates, indicating a slow recovery in luxury goods demand.