Investment Rating - The report assigns an "Overweight" rating for the luxury goods industry, indicating an expected performance that exceeds the Shanghai and Shenzhen 300 Index by more than 15% [1][9]. Core Insights - The luxury goods industry is entering a phase of normalized competition, with significant differentiation in profitability among brands. The fourth quarter of 2025 shows improvement in Greater China, while North America demonstrates resilience despite high comparatives [3][4]. - The report highlights that the industry has lost approximately 20% of consumers over the past few years, with brands like Coach and Miu Miu showing strong revenue growth, while others like Gucci are still experiencing declines [4]. - The pricing strategy for 2026 is expected to tighten, with brands like Hermès and Moncler planning modest price increases, while Gucci aims to adjust its pricing matrix to stimulate demand without aggressive hikes [4]. Summary by Sections Industry Overview - The luxury goods sector is transitioning into a phase characterized by stock competition, with varying performance across brands. The fourth quarter of 2025 saw a general improvement in Greater China, while North America showed some resilience despite high comparative figures [3][4]. Brand Performance - Coach achieved a robust 25% revenue growth in Q4 2025, while Miu Miu's retail sales increased by 35%, although growth slowed to 20% due to a high comparative base from Q4 2024. Hermès reported an 8.9% revenue increase, showcasing strong stability throughout the year [4]. - Brands in transition, such as Burberry and Gucci, showed marginal improvements, with Burberry's same-store sales growing by 3% in Q4 2025 and Gucci's revenue decline narrowing from -14% in Q3 to -10% [4]. Profitability Analysis - Profitability among brands is significantly differentiated, with Tapestry leading in profit margin expansion due to increased customer spending and operational leverage. Hermès also saw its operating margin expand to 41% due to strong pricing power and a vertical supply chain [4]. - Conversely, Kering faced a decline in operating margin by 3.4 percentage points due to Gucci's ongoing struggles, while Canada Goose's profitability was pressured by higher-than-expected expense growth [4]. Market Dynamics - The report notes that the fourth quarter of 2025 saw a general improvement in Greater China, with brands like Burberry and Coach reporting significant growth. However, the improvement is attributed to factors such as the appreciation of the yen and proactive marketing strategies [4]. - The North American market showed a slowdown in growth compared to previous quarters, but brands like Hermès and Tapestry still demonstrated improvement when comparing Q4 2025 to Q3 2025 [4]. Future Outlook - The luxury goods industry is expected to see a tightening of price increases in 2026, with brands like Gucci and LVMH adjusting their strategies to be more competitive. Additionally, 2026 will witness a significant turnover in creative directors across several luxury brands, which could impact future product offerings and market responses [4].

What will the consumer industry look like in 2026? The World Ahead forecasts big changes.The luxury industry will regain its lustre. Chinese brands will go global. And hypercars will go electric—but who will buy them? https://t.co/ABswCkBxSP https://t.co/aTB0mhnGPs ...

Richemont sales jumped on better-than-expected demand in the the Americas and the region including China, the latest signal the luxury industry is turning the corner https://t.co/N1xUErNg5Q ...