The start of the year looks, for a potentially brief moment, like a reboot for luxury after some strong earnings releases from Brunello Cucinelli and Richemont over the past week. The sour mood surrounding the retail luxury industry, particularly luxury fashion, for the past six months or so may lift for at least a bit after Brunello Cucinelli announced full-year 2024 revenue growth of 12.4 percent with strong growth across all geographies, including China. This was not a total shock as Brunello Cucinelli was among the strongest performers in a year when dispersion in sales growth was the theme of the first nine months of the year.

However, Richemont surprised investors by posting a strong Q3 (October to December on the fiscal calendar) of 10 percent growth, implying a 4 percent growth rate during the first nine months of their reporting year. Like many of the larger luxury groups, sales were weak in Asia Pacific (down 7 percent, comprising about a third of sales) during the quarter, with growth powered by ~20 percent growth in the Americas (24 percent of sales), Europe (23 percent) and MENA (0.08 percent).

These results powered optimism for luxury in financial markets. Our cap-weighted FSW Markets All Luxury Index was up 17 percent on the week and is now up almost 20 percent on the year. Luxury represents about a third of the Paris CAC-40 and that index was up 2.8 percent on the week and 4.5 percent on the year. This compares to a 2 percent return for the S&P 500 and 1.4 percent decline for the SPDR S&P Retail ETF (XRT) this year. Industry titan LVMH, which kicks in about a third of global luxury fashion revenues, has at least briefly regained its crown as the largest company in Europe from a slumping Novo Nordisk.

It is unclear to what extent this past week’s results are a leading indicator for the rest of the industry as we wade further into the full-year 2024 earnings season. Richemont’s sales are dominated by its Jewelry Maisons division, including Cartier and Van Cleef & Arpels. This division represents almost three-quarters of group revenues and was up 14 percent for Q3. So, groups with heavier exposure to soft luxury and aspirational consumers may struggle. For what it is worth, Richemont’s “Other” division, which includes fashion and accessories brands, such as Chloé and Maison Alaïa, was up 11 percent for the quarter even though they are a small part of the Richemont pie.

In global macro news that impacted the industry last week, China’s Q4 GDP growth print beat expectations at 5.4 percent. However, recent private consumption numbers do not point to a near-term rebound. U.S. CPI came in at 2.4 percent, countering fears that we may see more hikes.

Coming up this week, we will see some economic activity indicators out of Europe on Friday. Most critically, we will see what the first few days of the Trump administration bring regarding tariffs and other announcements.