Core Insights - The global luxury goods sector is experiencing a prolonged slowdown in 2025, with personal luxury goods spending expected to remain flat at approximately €1.44 trillion ($1.56 trillion) after a contraction in 2024, marking one of the weakest cycles since the Great Recession [1][4] - Despite the current challenges, forecasts indicate a potential rebound in 2026, driven by renewed demand in emerging markets and early signs of recovery in Chinese consumption patterns [2][4] Industry Overview - The luxury sector is anticipated to grow between 3% and 5% in 2026, a significant improvement from the flat performance in 2025, with emerging markets, particularly Asia Pacific, playing a crucial role [4][6] - Leading brands are adjusting strategies by easing aggressive price hikes and refreshing product assortments to re-engage consumers [5][10] - The U.S.-China trade dynamics are expected to stabilize, reducing cost uncertainties for luxury goods companies and creating a more favorable environment for global luxury demand [7][10] China Market Dynamics - China's luxury goods market, valued at hundreds of billions of U.S. dollars, is positioned for mid- to long-term growth, supported by an expanding middle class and increased digital retail penetration [8][10] - Domestic luxury spending in China stabilized in the latter half of 2025, indicating potential for renewed growth in 2026 [9][10] Company-Specific Insights - **Kering**: Expected to benefit from a rebound in 2026, particularly through its Gucci brand, with projected earnings growth of 35.2% on revenue growth of 1.4% [11][12] - **Richemont**: The company's jewelry division remains resilient, and easing tariff uncertainties may alleviate previous pressures on its share price, with expected earnings growth of 10.3% on revenue growth of 6.8% in fiscal 2027 [13][14] - **Burberry**: Undergoing a brand repositioning, Burberry could see a significant tailwind from stabilization in China and emerging markets, with projected earnings growth of 67.9% on revenue growth of 3.9% in fiscal 2027 [15][16]