The answer to the question of whether the sector of luxury, after much suffering, is really recovering, given yesterday's jump in the stock markets, could be seen in tonight's data: the China, pumped up for months by government stimulus packages, has managed to confirm that level of 5% of GDP by 2024 promised by the government.
I Chinese consumers they have long been the backbone of European luxury and the lack of their presence, since Covid onwards, has caused the balance sheets of the major fashion houses to plummet, but now the hope that the improvement of internal economic conditions could push them to return.
But beyond that, there is a hope/expectation among companies that the sector can be spared from the Trump's tariffs and therefore also from this side it could have more room to grow. There are no details yet regarding the sectors that the US will want to hit, but what emerges is that they will be those considered sensitive for national or economic security and among these the world of fashion and luxury does not seem to be touched. In addition, if there really were an economic recovery also in the States with a stronger dollar, consumers could reappear.
A stronger China puts consumers in a good mood
Today's data from Beijing show a GDP rose 5,4% year-on-year in the fourth quarter, +1,6% on a quarterly basis. The extension of the last three months of the year comes after the 4,6% of the third quarter, 4,7% of the second and 5,3% of the first. Thus, the 2024 GDP records a growth of 5%, which represents one of the lowest levels in recent decades, but which is in line with the government's indications. That number is considered crucial for Beijing, as confirmed by President Xi Jinping in his New Year's speech: it represents the minimum threshold to avoid further deterioration of confidence in companies e consumers. Starting from the end of September, the Chinese government has launched a massive plan of measures to support growth with new strategies desired by the leader so that GDP depends less on real estate sales and more on high-end production.
Also from today is the data on industrial production Chinese, growth of 5,8% in 2024 (+4,6% in 2023), with the acceleration to +6,2% in December, while the retail sales stood at +3,5% (they were at +7,2% in 2023), with a recovery to +3,7% in the last month of the year. The growth took place in the face of a "complicated and severe environment with increasing external pressures and internal difficulties", the National Statistics Office noted, in the midst of "difficulties and challenges" that are also foreseeable in the future.
Does the Richemont swallow bring spring?
The luxury quarterly results in Europe started last Monday and are showing rather strong trends: starting from BRUNELLO CUCINELLI, followed by the very positive numbers of Richemont. The analysts of Citi, commenting on the data from the Swiss giant that owns Cartier, say that "the strong growth in revenues across all regions, channels and divisions" are a positive sign both for the company - considered "fundamentally stronger than in previous periods of crisis in the sector" - but also for the holding of the entire sector. The numbers in fact highlight a rebound during the Christmas holidays, which are crucial for shopping. The data show "that the previous quarter - which had seen an 11% drop in sales - could have been a low", from which it will be possible to recover, the bank's experts add.
“It is probably too early to tell whether this is a new inflection point for the luxury goods sector,” after recent weakness, he warns. Kepler Cheuvreux, who however acknowledges that Richemont's quarterly report is "certainly a very encouraging" sign. "So far the data has shown some strength even without China, but if it were to return we could see a new boost," says another strategist.
“After two years of underperforming luxury retail, we see this changing as we move into 2025,” he says. Deutsche bank, whose analysts see a rosy second half of this year “when earnings momentum and sentiment will be key” to drive change. “We believe that Chinese consumer weakness is more cyclical than structural and we see a shift away from quiet luxury as Chinese consumer confidence returns, supported by stimulus,” the institute’s experts say. Furthermore, “US tariffs are less relevant for luxury than for sportswear.”
LVMH's key data at the end of the month
To have clearer indications, we will have to wait for the 28st January, when lvmh – the most important company in the sector – will present its results. If the numbers of Bernard Arnault’s group were to beat expectations, it could trigger another rally in the sector. Other companies, such as Hermès, Burberry, Zegna and Ferragamo, are ready to reveal their accounts in the coming days. In February, it will be the turn of Kering, Moncler and Hermès, while Prada will close the accounting season in March. Kering, owner of Gucci, and Hermès, maker of Birkin bags, will follow in February.
Richmont In the third quarter of 2024, it recorded a 10% increase in sales at constant exchange rates, reaching an all-time high of 6,2 billion euros.
Yesterday at Piazza Affari, Richemont's rally (+17,1%) kicked off an explosion of increases in the luxury sector. Today, despite a cautious session in view of Donald Trump's inauguration on Monday, prices remain positive. And so Richemont itself adds another 1,9% today, while Moncler (yesterday +8,08%) remains at parity today and Kering (yesterday +8,69%) is at +0,86% this morning. In the lead, followed by Ferragamo (+6,04%) and Hermès (+5,16%).
Encouraging indications also from the first fashion show in Florence
Clues can also be found on the catwalks. The preliminary results of the fashion show Pitti Uomoo in Florence indicated almost 13 thousand buyers of which 4.700 came from abroad, an increase of 6% compared to the previous year. The data are an injection of (cautious) optimism for international men's fashion and for the entire system of Made in Italy: Pitti Uomo is the most important fair in the world for men's clothing and accessories and, with Milan, to use the words of Brunello Cucinelli, "composes the most beautiful men's fashion week in the world". Cucinelli is among the few to participate in both events. With the Florence event closed today, the baton of men's fashion passes to Milan until January 21, opening two months of fashion shows and collections for autumn-winter 2025/2026. For women's fashion, we will have to wait for the fashion shows between February 25 and March 3.