Luxury sector in crisis: is it time to return to investing?
The last six months saw a significant drop in stocks in the luxury sector , as can be seen from the negative trends of the main indices that include the most important luxury brands.
Major ETFs such as Amundi S&P Global Luxury took a heavy hit from the markets, suffering a hefty -22%.
Even one of the most important indices representing the global financial thermometer, the MSCI World Index , reports a negative trend which stands at -21%.
Luxury brands in crisis
Even the most renowned luxury brands listed on the stock exchange suffered during the black semester that not even Moncler spared, which recorded a heavy drop of -41% .
Tod's also swooped down , undergoing a worrying negative trend that reached -38% .
On the other hand, Zegna is saved, which collected the best result in the luxury sector , riding a positive trend that allowed it to close with a good + 12%.
All the major European luxury stocks have been at a loss since the beginning of 2022, as shown by the data collected in the table below.
| EU luxury stocks | YTD | 1 years |
|---|---|---|
| Louis Vuitton | -18.95 | -12.45 |
| Hermes International | -30.80 | -13.70 |
| Christian Dior | -20.04 | -16.07 |
| EssilorLuxottica | -23.37 | -7.60 |
| Dry | -28.47 | -32.98 |
| Richemont | -23.58 | -7.30 |
| Pandora | -41.94 | -44.06 |
| Moncler SpA | -36.43 | -29.24 |
| Burberry Group | -6.04 | -18,18 |
| Hugo Boss | -6.59 | 9.62 |
| Brunello Cucinelli SpA | -27.84 | -10.62 |
| S. Ferragamo | -32.71 | -16.52 |
| Swatch Group | -17.59 | -27.60 |
| Tod's | -38.23 | -46.14 |
| Geox SpA | -27.44 | -30.70 |
| Ted Baker | -19.82 | -42.79 |
The main causes of the collapse of the luxury sector
The causes that led to a negative trend in the luxury sector are mainly due to the numerous lockdowns imposed by the Chinese government to deal with the worrying trend of Covid-19 infections.
The strong exposure of luxury brands in China has registered a worrying negative trend that has not spared even the giants of international high fashion.
Among the causes of the collapse of securities in the luxury sector, the current conflict between Russia and Ukraine should be highlighted, which has consequently led to the closure of the activities of giants with high potential stocks such as LVMH, Prada, Hermès, Moncler and Kering .
Although Russia and Ukraine are not strategic countries for the luxury sector and represent no more than 5% of the global market, international instability has dealt a severe blow to luxury brands.
Forecasts and recommendations on the luxury sector: is it worth investing?
So what are the forecasts and recommendations of the main analysts on the luxury sector ? Could it be the right time to buy stocks at a cheaper price, in view of a possible increase in value when the markets stabilize?
According to experts, a target price of 60 euros is set for luxury brands such as Moncler and Barclays, with an upward forecast of + 32% .
These are luxury brands already projected to invest in autumn-winter collections and achieve positive results after the losses recorded due to the recent lockdowns in China.
Expert analysts recommend a target price for Barclays and Tod's which stands at 40 euros, with a positive increase of 15%.
A lower positive trend due to the strong exposure to the Chinese market and to a weaker corporate branch than Moncler and Barclays.
Interesting recommendations on upward forecasts in the luxury sector which, between now and the end of the year, could record an increase in value after the current collapses that have caused even the most important luxury brands to plummet.
A good reason to buy shares today at a cheaper price and ride the bullish wave determined by the interesting forecasts of market experts, net of the medium-high risks that have always characterized this type of investment.
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