Bernard Arnault LVMH

Luxury fashion brands work hard to cultivate an image of exclusivity and value, but recent shopping and economic trends have left some struggling more than others.

In a new report on the ups and downs in the luxury sector, HSBC Bank said it has “concerns” about companies such as Tiffany, Burberry, Jimmy Choo and even Richemont, which holds Chloé, Azzedine Alaïa and Cartier, among many other high-end brands.

The bank pointed to management shake-ups and other “much-needed cultural changes” as positive for the future of these brands, but said they remain a “work in progress” with full turnarounds yet to be seen.

Nevertheless, HSBC said “management rejuvenation has become a necessity” and it expects further leadership changes at Salvatore Ferragamo, Burberry and likely elsewhere.

Other brands have benefited from a boost to consumer confidence since mid-2016, as well as some already executed changes in leadership. Kering’s changes at Gucci, shifts in management at Coach as well as Louis Vuitton were all highlighted by HSBC as success stories that led to a rebound in sales.

In addition, an industry divided between success and struggle, with growing investor activism and continued management issues for many, has HSBC looking toward possible mergers and acquisitions.

“The interesting thing about the current phase of the industry’s cycle is that cash is piling up, valuations look high and management issues have multiplied,” HSBC said. “In other words, we believe the sector is ripe for M&A.”

In looking at corporate history, current balance sheets and recent changes in strategy, HSBC said LVMH Moët Hennessy Louis Vuitton, Coach and Kering “in that order” are the most likely to be active “consolidators” during 2017.

As for LVMH’s position, HSBC said the group has long been “the default brand aggregator in the sector, and we expect it to continue to acquire in the future.”

The bank mentioned skin care as a possible acquisition interest for LVMH as well as hard luxury, like Tiffany.

HSBC even floated the “highly theoretical” possibility of a LVMH-Richemont tie-up, given the “succession issues” possible should their respective controlling shareholders, Bernard Arnault, 68 , and Johann Rupert, 66, retire.

Kering, too, is a star in HSBC’s eyes, in large part due to the success of Gucci and Saint Laurent, which both hold “a lot more growth potential,” according to the bank, but a possible spin off of Puma could mean more cash to take on other brands.

“While timing is uncertain, we think the group could exit its stake in Puma soon rather than later, freeing up M&A potential that is currently constrained by the group’s debt.”

The specifics of any moves and any deals may be speculative, for now, but as HSBC noted, “the constant in luxury is change.”