Is this the new standard of this luxury?

PARIS – The sidewalk cafes and metro cars of the French capital are currently groaning under the weight of a full-throttle rebound in international tourism. American, British, Italian and Spanish-speaking visitors are back in full force, even as the return of spendthrift travelers from China, Japan and Korea remains relatively confined to the first summer since those countries lifted their Covid-era travel restrictions.

The crowded queues outside boutiques from Louis Vuitton to Officine Buly to Vivienne Westwood are a stark contrast to a few weeks ago, when a fresh round of protests and riots in France (this time over police violence) scared away many high-end shoppers: For a few days in early July, you could walk straight into the normally crowded Hermès flagship, by reservation only, on rue du Faubourg Saint-Honoré.

In financial markets, sentiment surrounding European luxury brands also continues to yo-yo. Swatch Group, owner of Omega, and Brunello Cuccinelli both beat estimates, while Burberry reported sales in line with forecasts. Cartier owner Richemont also matched average estimates last week. Still, slumping sales in the United States and relatively cautious comments about China’s rebound sparked a sharp selloff, with shares of the third-largest luxury group falling as much as 10% on Monday.

This week, the top remaining luxury players are expected to update the market in quick succession. Analysts’ estimates have fallen only slightly in recent months, but Richemont’s results seem to have bolstered the credibility of their forecast of more moderate growth in the second half of this year after more than 2 years of rapid expansion. As such, commentary on current trading and the outlook for the coming months could be just as important as the first half numbers.

On Tuesday, industry leader LVMH will be seen as providing the most definitive opinion on whether big brands can thread the needle as they try to ensure China’s sales rebound balances headwinds in the United States and Europe.

Citi expects full-year organic growth of 15% in LVMH’s fashion and leather division and 13% group-wide, a sharp decline from last year’s post-Covid boom. A tougher base of comparison in China (where Covid restrictions were temporarily eased last summer compared to 2Q) and Europe (where tourism rebounded in the second half of last year), combined with stubborn inflation in the US could make it difficult to continue posting big beats.

“The sector has been used to delivering positive surprises for a number of years,” said analyst Thomas Chauvet. “Now we see a bit of concern about the coming normalization of growth.”

Other reports will be more brand-specific: at Kering, investors will seek reassurance about the implications of a leadership transition at flagship Gucci. In addition to appointing a new designer Sabato de Sarno earlier this year, the company announced on Tuesday that CEO Marco Bizzarri will be leaving the brand.

Gucci’s pre-redesign plan – to better balance fashion excitement with celebrating heritage and building long-term brand prestige – is unlikely to change. But the market is hungry for clues as to how this strategy will be implemented and how long it will take to see results. Investors will also be trying to get a feel for how De Sarno’s brand revamp is shaping up ahead of its catwalk debut in September, and whether a new CEO is already lurking behind the scenes.

Prada’s results will test whether an independent mega-brand can maintain its post-Covid surge in a rockier fashion market, without the backing of a major group. Hermès will show the impact of price hikes and volume increases for its key leather goods division, while revealing whether faster growth since the pandemic for other categories like fashion accessories, homewares and jewelry can build momentum.

What else to watch this week


LVMH and Essilorluxottica announce their results


Puma and Moncler publish their results

Federal Reserve Interest Rate Decision (US)


Results at Zegna, Prada, SMCP, Crocs, Kering, L’Oréal, Skechers, Deckers, Frasers Group


Hermes results

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