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High-End Luxury Brands Unfazed by Economic Slowdown

Story Highlights

High-end luxury brand owners continue to deliver strong sales growth. These companies expect the momentum to be sustained despite the uncertain backdrop.

The Q3 performance of high-end luxury brands indicates that they remain unfazed by the weak global macro environment and disruptions in Europe. On October 20, Hermes (GB:0HV2)(HESAF) and Kering (GB:0IIH)(PPRUY) delivered solid Q3 performance, wherein they recorded strong sales growth. 

For instance, Hermes’ consolidated for the September ended quarter jumped 30% with broad-based growth across all regions. Its executive chairman, Axel Dumas, remains upbeat despite the economic and geopolitical uncertainties and expects the company to post revenue growth. 

Meanwhile, Kering, which owns top brands like Gucci, Bottega Veneta, and Saint Laurent, among others, delivered 23% growth in its group revenue. Kering’s CEO, Francois-Henri Pinault, said, “Kering’s solid performances in the third quarter underscore the strength of the Group and the pertinence of our strategy. We delivered sharp top-line growth, both versus last year and from pre-pandemic levels.” 

Compared to the Q3 of 2019 (the pre-pandemic period), Kering’s top line was up 28%.

Earlier, LVMH Moet Hennessy Louis Vuitton (GB:0HAU)(LVMUY) also announced strong Q3 financials. Its revenues increased by 28% in the nine months of 2022. Meanwhile, its organic sales recorded a growth of 19% in Q3, which is encouraging. The fashion house is confident that the momentum in its business will be sustained even amid the uncertain economic and geopolitical backdrop.  

While these luxury brands continue to perform well, let’s examine what analysts recommend. 

Is Hermes a Buy or Hold?

Hermes stock has a Hold consensus rating on TipRanks based on four Buys, seven Holds, and one Sell recommendation. The complex economic environment is keeping analysts on the sidelines. Meanwhile, their average price target of $1,349.23 implies 3% upside potential. 

Further, 3% of the investors holding portfolios on TipRanks reduced their exposure to Hermes stock.

What is the Prediction for Kering Stock?

Kering stock has received eight Buy and five Hold recommendations for a Moderate Buy consensus rating. Meanwhile, analysts’ average price target of €645.69 implies 37.5% upside potential. 

TipRanks’ data shows that hedge funds bought 783.1K Kering shares last quarter. Further, bloggers are bullish about Kering stock.

Is LVMH a Buy, Sell, or Hold?

LVMH stock sports a Strong Buy consensus on TipRanks based on 14 Buy and two Hold recommendations. Further, analysts’ average price target of €772.47 implies 21.8% upside potential.

While analysts remain bullish, hedge funds and retail investors have sold LVMH stock. Hedge funds sold 254K LVMH stock last quarter. Meanwhile, 0.7% of investors lowered their holdings in LVMH stock in one month.

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