By  on October 16, 2008

MILAN — More bad news for European luxury: The worst is yet to come.

On Thursday, Deutsche Bank forecast that 2009 would be the worst year on record for the luxury sector and cut its sector earnings per share forecasts for the next two years.

"Given the macro headwinds and a deteriorating wealth effect, we now assume a more severe slowdown in both mature and emerging markets than previously," Deutsche Bank analyst Francesca Di Pasquantonio wrote in a note.

Di Pasquantonio forecast an organic industry sales decline of around 1 percent, from growth of 6 percent, in 2009 and little rebound in 2010 to make it the worst year on record.

She also made wholesale downward revisions on price targets for Compagnie Financière Richemont SA, Swatch Group Ltd., Burberry Group plc, Bulgari SpA, Luxottica Group SpA, Tod¹s SpA, Hermes International, LVMH Moet Hennessy
Louis Vuitton, PPR and Puma AG.

However, despite the grim outlook, the analyst did see value in Richemont, Swatch and Burberry, upgrading them to "buy" from "hold" given their strong balance sheets and low valuations.

The report came as stocks declined in Asia and Europe on growing concerns the bailout plans in the U.S and Europe will fail to prevent a global recession.

For complete coverage, see Friday's WWD.

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