Editor’s Note
This analysis outlines a cautiously optimistic outlook for the European luxury sector in 2026, forecasting a return to growth. It highlights key strengths, from brand heritage to sustainability, while noting critical dependencies and pressures.
Sector Situation
After several false starts by the sector in 2025, we believe 2026 may finally be the moment when we see growth again. We expect aggregate LFL growth of 5.5%.
Strengths
– Innovation in Jewelry
– Brand value due to history and craftsmanship
– Diversified Global Exposure.
– Adaptation to Sustainability.
– Strong balance sheet/M&A.
Weaknesses
– High exposure to the Chinese consumer.
– Margin pressure after years of strong price increases.
– Price and Volume Fatigue.
– Production in Europe, tariff risk.
Opportunities
– Growth in Sporting Goods.
– Comparable bases and an improvement in the global consumer will support a top line that will remain more important than sector valuation.
– Innovation and New Products.
– Expansion in Emerging Markets.
– Digital Transformation.
– Wealth effect in the U.S./ Crypto.
– Strong European consumer.
– Stimulus for consumption in China.
Threats
– Global Economic Uncertainty.
– Change in Consumer Preferences.
– Regulatory Challenges.
– Intense Competition.
Sector Situation
We see an environment of moderate growth for the US consumer with areas of strength in specific verticals. Consumer sentiment is fragile and slightly declining. Lower-income segments are under pressure.
Strengths
– A resilient labor market, with real wages growing.
– Inflation higher than normal, but with signs of stability that will allow for rate cuts.
– Online sales grew 7-10% y/y during key events like Black Friday.
– A confident American consumer, especially high-income earners with high purchasing power.
Weaknesses
– Low confidence among lower-income earners.
– Very low savings rates.
– Climate sensitivity.
– Sector competitiveness, market share fragmentation, lower barriers to entry (new participants in the international market).
– High promotional intensity in the market.
Opportunities
– Market/category expansion.
– Store optimization.
– New digital trends and online marketing expand market reach.
– Pricing (as a countermeasure to potential tariffs; through product bundling).
– Growth driven by continued investment in products, marketing, stores, and nearshoring (supply chain/supplier adjustments).
Threats
– Risk of potential inflationary impact from new tariffs.
– Changes in consumer behavior due to economic uncertainty.
– Geopolitical tensions.