In China you are witnessing a change of attitude towards luxury goods, which could lead the sector to enter a new era in which the most famous brands of the old continent could fear the competition of Chinese ones.
This is what emerged from the recent Barclays study on European Luxury Goods & Specialty Retailin which experts retain their “neutral” vision on the sector of luxury goods but at the same time report that the ability to maintain the historical growth of turnover of about 7% could be more difficult in the future.
In fact, from the meetings with investors, a widely shared opinion emerges about the fact that the sector can grow to a single-digit high level once China has stabilized.
Changes the attitude towards luxury goods
The field meetings by Barclays analysts suggest a lower propensity to purchase luxury goods due to a lower level of social pressure, a decreasing marginal utility for usual consumers; and the growing interest in other segments such as well -being (outdoor, technology) or experiences (travel, restaurants).
Now, therefore, the Chinese brands, also supported by a greater national pride, are considered as serious competitors of the historical ones of luxury. The rise of national brands such as Laopu Gold shows that Chinese brands can compete for the same market share.
The number of Chinese consumers grows that believes that the quality of Chinese products has reached the western one, and this could weaken the high barrier at the entrance of European luxury brands.
China, therefore, as the report suggests, after being the main growth engine of the luxury sector in recent decades, is now becoming a battlefield for the conquest of market shares in which brands will have to fight to retain consumers through actions such as storytelling and a stronger offer.
Some titles under observation: Burberry, Lvmh, Moncler and Hermès
In view of the third quarter, Barclays is progressively more positive on Burberry, Lvmh and Moncler and slightly more negative on Hermès.
For Burberry, on which it expresses an Equal Weight judgment, the feedback of the operators of the luxury shopping centers has highlighted an improvement in performance thanks to the strategic changes implemented by management and fashion experts consider the latest most interesting offers. As a result, analysts raise estimates on the EPS for 2026 of 5% and bring the target price to 1,360 pounds from 1,250 pounds previously.
The products of Moncler’s spring/summer collection (Equal Weight judgment) recorded good performances and the momentum remained positive for the brand, which leads experts to increase forecasts for 3q 2025 and for the EPS by 2026 by 1%. The target price goes to 56 euros of 55 euros.
Looking at LVMH (Gidizio Equal Weight), the main brand Louis Vuitton also seems to improve sequentially, based on feedback on shopping centers, thanks to a strong marketing push, such as the launch of cosmetics in China, even with more moderate feedback on other divisions such as Sephora or Wine and Spirits. The growth forecasts in Asia for future years have been slightly reduced with changes limited to the INPS. Confirmed the target price for 530 euros.
Greater caution on Hermes (Overweight judgment). Although the brand is still obtaining better results than the sector, the lack of a strong acceleration and therefore the need for greater commitment to the past to generate sales emerges. Barlays therefore reduced estimates with an EPS for 2026 seen in 2%. The objective price for 2,510 euros from the previous 2,640 euros was also retouched.
