On the back of expectations for a weak of revenue growth this year, luxury stocks have started the year with a beating as the Stoxx Europe 10 index continued the downward trend that started in mid-December and is down by over 200 basis points today (chart below). We do not read this as a potentially poor year historically for luxury brands, but as a normalization of revenue growth after the post-pandemic surge. However, diverse names (LVMH) and those that cater to wealthier clients (Hermes) will perform better than those who depend more heavily on aspirational consumers.
Stoxx Europe 10 Index Level, October 1, 2023 – January 3, 2024