Investment Rating - The report provides a mixed investment rating for the luxury goods sector, with specific companies like LVMH and Hermès showing resilience, while others like Kering and Canada Goose are facing significant challenges [22][30]. Core Insights - The luxury goods market is experiencing a slowdown, with overall retail sales in North America showing fluctuations, particularly in the luxury segment, which saw a decline of up to 14% in certain months [6][22]. - The report highlights a significant disparity in performance among luxury brands, with LVMH and Hermès maintaining positive growth, while Kering and Canada Goose reported substantial declines in revenue [22][30]. - The global economic outlook remains cautious, with the IMF projecting a world GDP growth of 3.2% for 2025, which may impact consumer spending in the luxury sector [4]. Summary by Sections Economic Outlook - The IMF forecasts a global GDP growth of 3.2% for 2025, with developed countries expected to grow at 1.8% and emerging markets at 4.2% [4]. - China is projected to grow at 4.5%, while India is expected to lead with a growth rate of 6.5% [4]. Retail Performance - North American retail sales showed a mixed performance, with overall sales declining by 0.4% in June 2024, while luxury retail sales experienced a more severe drop of 14% [6]. - The luxury segment's performance is expected to remain volatile, with some months showing recovery while others continue to decline [6]. Company Performance - LVMH reported a revenue decline of 7.1% in Q2 2025, while Hermès showed a more stable performance with a decline of only 0.5% [22][30]. - Kering faced a significant revenue drop of 17.9%, indicating challenges in its luxury brand portfolio [30]. - Canada Goose reported a staggering decline of 61.8% in its latest quarter, highlighting severe operational challenges [30]. Market Trends - The report notes a shift in consumer behavior, with a growing preference for brands that offer unique and aspirational products, impacting traditional luxury brands negatively [22]. - The luxury watch segment, particularly Swiss watch exports, saw a decline of 5.6% in June, indicating broader market challenges [10]. Regional Insights - The report emphasizes the importance of the Chinese market for luxury brands, with a notable increase in Chinese tourists traveling to Japan and the U.S., which could influence luxury spending patterns [17]. - The performance of luxury brands varies significantly by region, with some brands performing better in Asia compared to North America and Europe [22].

Core Viewpoint - The luxury goods growth model is being questioned as major players like Prada, LVMH, and Kering report disappointing earnings, raising concerns about the sustainability of their growth strategies [2][10]. Financial Performance - Prada Group's financial report for the first half of 2025 shows adjusted EBIT of approximately €618.5 million, a year-on-year increase of 7.55% [6]. - Net income reached about €386 million, reflecting a slight increase of 0.62% year-on-year [6]. - Retail sales net revenue grew by 10.1% year-on-year, with retail sales accounting for 89.5% of total net revenue [6]. Brand Performance - There is a stark contrast in performance between the two core brands: Prada's revenue declined in Q2, while Miu Miu experienced a significant growth of 49% [7][9]. - At fixed exchange rates, Prada's retail sales net revenue slightly decreased by 2%, while Miu Miu's retail sales net revenue surged [7]. Market Trends - All major markets reported growth: Asia-Pacific up 10.4%, Europe up 8.6%, Americas up 12.4%, Japan up 4.3%, and the Middle East showing a remarkable increase of 25.7% [7]. - Morgan Stanley noted that Prada's Q2 performance was below expectations due to a slowdown in luxury consumption among cross-border travelers, with a year-on-year sales growth rate of 6.1% compared to 12.5% in Q1 [7]. Future Outlook - Prada has issued a warning for the second half of the year regarding uncertainties in the recovery of the tourism sector, while emphasizing three certainties: maintaining a full-price sales strategy, reviewing operational efficiency quarterly, and avoiding "shortcut" growth [8]. - Miu Miu plans to expand its market share in leather goods and introduce new store experiences globally, while Prada aims to sustain growth through precise retail strategies and new store openings [9]. Industry Challenges - The luxury goods sector is facing significant challenges, potentially experiencing its largest setback in 15 years due to economic uncertainties and changing consumer sentiments, particularly among younger generations [11]. - Brands with prominent logos are struggling, while those with subtle branding, such as Loro Piana and Brunello Cucinelli, are seeing growth, indicating a shift in consumer preferences towards understated luxury [12].

Group 1 - The core viewpoint of the report indicates that Prada's sales for the first half of the year increased by 9% year-on-year when calculated at constant exchange rates, aligning closely with Macquarie's forecasts [1] - Net profit rose by 0.6% year-on-year, which was 7% lower than Macquarie's predictions, primarily due to non-recurring costs associated with the acquisition of Versace [1] - Macquarie has revised its net profit forecasts for Prada for the years 2025 to 2027 downwards by 7.6%, 7.1%, and 6.6% respectively, to account for the first half performance and brand investments [1] Group 2 - The target price for Prada has been reduced by 8% from HKD 65 to HKD 60, while maintaining an "outperform" rating [1] - Management anticipates that overall tourist traffic in Japan and Europe will stabilize year-on-year by the end of August [1] - The company aims to enhance brand value and believes there is still room for improvement in profitability through operational leverage [1] Group 3 - Management believes that Miu Miu's penetration rate remains low in many countries, indicating further potential for improvement in product categories and combinations [1]

Core Viewpoint - Morgan Stanley reports that Prada's second-quarter performance was below expectations due to a slowdown in luxury goods consumption among cross-border travelers, with sales growth at 6.1% year-on-year compared to 12.5% in the first quarter and market expectations of 9% [1] Group 1: Financial Performance - Prada and Miu Miu brand revenues were slightly below expectations, with same-store sales growth around 9%, indicating a lack of operating leverage, resulting in adjusted EBIT for the first half being 3.1% lower than expected [1] - The latest sales forecast for the third quarter has been downgraded to a growth of 8.3% from a previous estimate of 10.4% [1] Group 2: Market Outlook - Morgan Stanley anticipates that the negative impact of international tourism will peak in the summer, leading to potential downward adjustments in sales forecasts [1] - The target price for Prada's stock has been reduced from HKD 66 to HKD 62, although the "overweight" rating is maintained, with the firm still viewing Prada and Miu Miu as strong performers in the luxury goods sector [1]

Group 1 - LVMH has experienced a decline of over 40% from its all-time high, resulting in a loss exceeding €100 billion in market capitalization [1] - The current valuation of LVMH is considered minimally attractive despite the significant decline [1]

Core Viewpoint - Prada's CEO Gianfranco D'Attis will leave the company by the end of the month, with Andrea Guerra temporarily taking over, amid a challenging luxury market environment and internal brand performance disparities [1][2]. Group 1: Management Changes - Gianfranco D'Attis, the first non-family CEO of Prada, is departing the company, which raises speculation about his future due to his absence from the Milan men's fashion show [1]. - Andrea Guerra, the CEO of the Prada Group, will temporarily assume the role of brand CEO following D'Attis's departure [1]. - The management changes come as several luxury brands, including Kering and LVMH, are also adjusting their leadership amid market pressures [1]. Group 2: Financial Performance - Prada's revenue growth for 2024 is only 4%, with Q1 2025 showing zero growth, falling short of market expectations [2]. - In contrast, Miu Miu, a brand under the same group, saw retail sales surge by 93% in 2024 and continued to grow by 60% in Q1 2025 [2]. - The sales growth rates for Prada from 2021 to 2024 have decreased significantly, from 44% to 4%, while Miu Miu's growth rates have increased dramatically [2]. Group 3: Strategic Acquisitions - The recent acquisition of Versace for €1.25 billion is a significant move for the Prada Group, aimed at expanding its brand portfolio [3]. - Analysts express concerns that while the acquisition may benefit Prada in the long term, it could pose short-term challenges and require careful management [3]. - The integration of Versace is seen as a test of Prada's capabilities, necessitating sufficient funding and management focus [3]. Group 4: Market Outlook - The global luxury goods market is entering a phase of low growth, with projections indicating annual sales growth of only 2%-4% from 2025 to 2027 [4]. - The overall market environment is expected to improve slightly in 2025, with total sales growth potentially remaining under 4% [4]. - The current market conditions present opportunities for acquiring quality assets at lower prices, which could benefit companies like Prada [5].

Group 1 - The core viewpoint of the articles highlights Prada Group's strong performance in the luxury goods sector, achieving a revenue of €1.34 billion in Q1, representing a 13% year-on-year growth, continuing the double-digit growth trend into 2024 [1] - Retail channel sales increased by 13% to €1.21 billion, accounting for 90% of the group's total revenue, demonstrating the effectiveness of the direct sales model in supporting brand premium and channel control [1] - The sub-brand Miu Miu experienced a remarkable 60% year-on-year sales increase, becoming a key growth driver for the group, effectively targeting Gen Z consumers through its "Miu Girl" branding and high-priced accessories strategy [1] Group 2 - The group announced the acquisition of Versace for €1.25 billion, expected to be completed in the second half of 2025, aiming to strengthen its multi-brand matrix against competitors like LVMH and Kering [2] - Prada Group's CEO emphasized a focus on "retail, technology, and capacity" as the three pillars for sustainable growth above market averages, indicating a strategic direction for the company [2] - With the dual support of sub-brand growth and strategic acquisitions, the group is making significant progress towards its goal of achieving €10 billion in revenue [2]

Group 1: Estée Lauder - Estée Lauder's Q3 report shows a 10% decline in net sales to $3.55 billion, with an organic decline of 9%, but slightly better than expected, and a gross margin increase of 3.1% due to the Profit Recovery and Growth Plan [2] - The company's China operations achieved low single-digit growth, driven by brands like La Mer, Estée Lauder, and Tom Ford, marking three out of the last four quarters with market share growth [2] - Global skincare and travel retail segments saw double-digit declines, with skincare sales down 11%, and makeup category performance was negatively impacted by M·A·C's product launch timing [2][3] Group 2: Prada - Prada's Q1 report indicates a 60.2% year-on-year increase in retail revenue for Miu Miu, contributing €377 million in net sales and increasing its share within the group from 22% to 31% [4] - The overall revenue for Prada Group was €1.34 billion, slightly above expectations, while competitors like LVMH and Kering reported sales declines [6] - Prada's cautious outlook reflects the challenging market conditions, with a focus on expanding its distribution network through partnerships, such as with Mytheresa [6] Group 3: Aesop - Aesop launched its first "tea fragrance" Virēre in mainland China, priced at 1,250 yuan, marking a significant increase in the frequency of new fragrance releases since being acquired by L'Oréal [12][15] - The brand's strategy aligns with the growing potential of the fragrance category in the beauty market, contributing to L'Oréal's double-digit growth in this segment [15] Group 4: Adidas - Adidas reported Q1 2025 revenue of €6.153 billion, a 13% increase year-on-year, with operating profit rising 82% to €610 million, driven by continued growth in the Chinese market [18] - The company maintains its full-year growth forecast despite tariff pressures, having minimized exposure to U.S. market products manufactured in China [18] Group 5: LVMH - LVMH's wine and spirits division is set to cut over 10% of its workforce, approximately 1,200 employees, due to a 9% decline in organic sales, primarily from weak performance in the U.S. and China [20]