The FSW Markets All Luxury Index closed up almost 7 percent last week. Outside of small declines from Burberry and PVH Corp., every constituent of the index was up on the week and most of them big.
The biggest gainer was Kering. On Tuesday, Kering announced that its full-year 2024 annual revenues were down 12 percent, with recurring operating income down 46 percent, and gross margins collapsing from 24.3 percent in 2023 to 14.9 percent (vs. an industry average of 30 percent). And yet, the market believes that it is finally looking at the trough despite or because of CEO turnover at Gucci, YSL, and BALENCIAGA and the removal of Sabato De Sarno.
Hermès closed up over 7 percent after issuing yet another strong earnings report. On Friday, Hermès revealed that annual revenue reached €15.2 billion, a 15 percent increase at constant exchange rates, and a net profit of €4.6 billion, representing 30.3 percent of sales. Growth was everywhere you could look in all geographies and all product lines apart from watches. Hermès’ share price is up almost 25 percent on the year, and its market capitalization has now exceeded €300 billion.
This strong week pushed the FSW Markets All Luxury Index up over 20 percent for the year as compared to a roughly 4 percent gain for the S&P 500, which is within 1 percent of an all-time high despite the fact that the January CPI print pointed to stubborn inflation that pushed back market expectations for another interest rate cut. The Euro Stoxx 50 (of which about 10 percent is luxury) closed up over 3 percent amid some positive earnings numbers. In China, the CSI 300 closed up just over 1 percent despite continued fears over the trajectory of tit-for-tat tariffs with the U.S. and more bad news out of the property market.
In the coming week, we will get a look into consumer confidence and retail sales in the UK, the FOMC will release its latest minutes, and we get the countdown to the German national election on February 23.