Core Insights - The report by Bank of America indicates that the overall luxury goods demand in Q2 2025 will be similar to Q1, presenting three scenarios: good, bad, and ugly [1] - Despite global economic fluctuations, local demand in Europe, Asia, and the Americas remains strong, while tourism in Japan and Europe continues to decline [1] - The luxury sector is facing pressure on EBITDA margins due to weak revenues and high fixed costs, with a 6% downward revision in profit forecasts compared to market consensus for H1 2024 [1] Group 1: Market Performance - Luxury goods companies' stock prices have dropped by 8% since the beginning of 2025, with consensus EPS also lowered by 8%, resulting in a dynamic P/E ratio of 22x, at the historical median [2] - Q2 2025 revenue trends show a 1% decline compared to Q1, with a weighted average indicating a 2% year-over-year decrease [2] - In the Americas, luxury spending improved by 3 percentage points in Q2, with jewelry consumption accelerating to +3% [2] Group 2: Regional Insights - In Europe, tourism spending deteriorated by 8 percentage points from Q1 to Q2, reaching -13%, while local demand remains stable [3] - Japan's tourism spending is expected to slow by 30-50 percentage points in Q2, leading to a 16 percentage point drag on overall revenue [3] - In China and other Asian regions, jewelry sales in China and Hong Kong, along with gaming revenue in Macau, improved by an average of 10 percentage points, while South Korea showed a slight decline of 6% [3] Group 3: Company-Specific Insights - LVMH is expected to face a bifurcated Q2, with fashion and leather goods potentially underperforming, while EBITDA margin pressures are anticipated [5] - Hermès forecasts a 9% revenue growth for Q2 and a 40.1% EBITDA margin for H1 [5] - Kering's performance is expected to align with previous guidance, with upcoming Q2 results being crucial for assessing market consensus risks for H2 2025 and 2026 [5] Group 4: Sales Forecasts - Prada's sales are projected to decline by 1% in Q2 due to adverse conditions in Japan, while Miu Miu continues to grow at 40% [6] - Zegna's performance improved in April, with a projected growth of 5% for Q2 [6] - The consensus revenue forecasts for various luxury brands indicate slight declines, with LVMH expected to generate $81.591 billion, down 2.3% from consensus [7] Group 5: Macau and Hong Kong Insights - Macau's gaming revenue forecast for 2025 has been revised down by 5%, with expected growth of only 1% compared to previous estimates of 6% [8] - Hong Kong's retail sales showed improvement in April, with a 2% decline compared to a 6% drop in Q1, indicating a recovery trend [12] - Visitor numbers in Hong Kong increased to 3.8 million in Q2, reflecting a 13% year-over-year growth in April, although still below 2019 levels [13]