Investor sentiment toward luxury stocks in 2025 is cautiously optimistic, with a more selective approach rather than broad-based enthusiasm, according to UBS analysts. While early earnings beats from Richemont and Burberry generated initial optimism, the sentiment has since become more measured. Investors now recognize that not all brands will benefit equally from improving market trends, making stock selection critical.
Jewelry and high-end consumer exposure are the favored segments, with Richemont and Hermès emerging as investor favorites. Richemont’s strong Q3 FY25 sales and a 27% year-to-date gain have bolstered confidence, with few questioning its potential for further upside due to clear earnings visibility and business transformation. Investor expectations for Hermès are similarly high, with optimism for a strong Q4 ahead of its next earnings report.
However, sentiment around sector giants is more mixed. Concerns about slowing organic sales and margin pressures cloud LVMH’s outlook, even for bullish investors. Moncler remains attractive for its high margins, but slowing revenue growth amid intensifying competition is a growing worry. EssilorLuxottica is well-regarded, yet its valuation has become a topic of debate due to its perceived long-term smart glasses potential.
Interest in Kering and Swatch is muted. Kering faces delays in Gucci’s turnaround following the departure of creative director Sabato de Sarno, ongoing negative EPS momentum, and balance sheet concerns. Meanwhile, the luxury goods sector now trades at a ~76% premium to MSCI Europe, near its 5-year relative average, suggesting the market may need a breather amid uncertain sales growth trajectories and a still-volatile environment.
