European Luxury Selloff Deepens on Goldman, Jefferies Warnings
(Bloomberg) -- Shares of European luxury-goods makers are dropping again as analysts at Goldman Sachs Group Inc. and Jefferies International Ltd. warned of further earnings pain to come amid unabating demand woes in China.
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A basket of stocks tracked by Goldman slid as much as 3.2% to the lowest level since late 2022 after analysts at the bank predicted the industry will see no growth this year, down from a previous estimate of 5% expansion.
“We expect a difficult six months ahead,” analysts including Louise Singlehurst said in a note. “While stocks have priced in some weakness, we incrementally continue to see downside risks.”
Shares of companies that produce high-end clothing, handbags and jewelry — like Burberry Group Plc and LVMH — are slumping as investors lose patience waiting for Chinese shoppers to start traveling and splashing out again post-pandemic. Demand from other regions has also waned after an initial post-Covid spike.
Goldman’s luxury basket has fallen about 25% since mid-March, while the broader Stoxx Europe 600 Index has risen by about 2%.
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Meanwhile, Jefferies cut its estimates for 2025 earnings before interest and tax to a level that’s 7% below consensus. Analyst James Grzinic downgraded Burberry and The Swatch Group AG to underperform, and cut LVMH’s price target by 13% to to 600 euros — the lowest among 36 brokers surveyed by Bloomberg.
LVMH shares dropped as much as 3.2% to 594.40 euros, while Burberry slid 5.1% and Swatch fell 3.8%.
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