PARIS — Investors are gaining confidence concerning the luxury sector as sluggishness yields to “sequential improvement in Asia-Pacific and the all-important Chinese cluster,” says a new research report by RBC Capital Markets.
Megabrands Gucci and Louis Vuitton surprised with strong like-for-like sales gains in the third quarter, “implying significant market share gains,” analyst Rogerio Fujimori wrote, also noting that these two luxury handbag brands were the most preferred in its recent survey of Millennial consumers in the U.S.
He noted that “easier comparatives in key markets like Greater China, Korea and the U.S.” are helping companies post positive revenue growth in Q3 and leading to “positive share price action.”
Despite weak wholesale guidance, Burberry shares also spiked on “unsubstantiated” speculation of a merger with Coach. “Never say never, but the probability of a deal seems low to us. This is due to Burberry’s size, brand life cycle stage, very different brand strategies and limited cost synergies, in our view,” the report says.
Pandora, Hermès International, Compagnie Financière Richemont and Jimmy Choo are due to report Q3 revenues in the coming weeks.
RBC expects Hermès to report another quarter of double-digit growth in leather goods.
“We also flag positive read-across from Dior Couture’s material sequential improvement in Q3,” the report read.
Revenues at the French fashion house rose 7 percent to 502 million euros, or $557.8 million, in the three months ended Sept. 30, as reported.
This marked “a decidedly positive shift with respect to the previous quarters,” the company said.
“Comments in the conference calls on current trading have been so far broadly encouraging as we approach the key festive season,” Fujimori added.