Barclays Sees Decade-Best Value in Luxury Stocks

Barclays argued Monday that luxury stocks now offer the most attractive valuations seen in ten years, CNBC reported Wednesday. The bank upgraded two of Europe’s biggest fashion houses and launched fresh coverage of the broader sector.

Barclays Upgrades LVMH and Kering

The bank lifted LVMH to overweight and raised its price target to 600 euros from 570 euros. Analysts pointed to ongoing turnarounds at Tiffany and Dior as catalysts. Creative resets at both labels are expected to support above-average revenue growth of roughly 5.4% annually through 2029.

Kering received an upgrade to equal weight alongside a sharper price-target increase, moving from 255 euros to 300 euros. Barclays projected the Gucci parent will grow revenues at roughly 8% annually through 2028. The bank also forecast that profit margins at the group could double by 2029 under new chief executive Luca de Meo, who unveiled his “ReconKering” strategic plan to investors last month.

Also Read: What Kering’s ReconKering Strategy Means for Gucci’s Recovery

What Is Driving the Sector Lower

The luxury sector has faced a bruising stretch. Growth in China, once the industry’s primary engine, has remained subdued. European demand has softened. Now the conflict in the Middle East is disrupting spending by wealthy regional consumers, removing one of the few remaining pockets of momentum.

Inflation pressures and a more selective global consumer have compounded those headwinds. Barclays noted that valuation multiples across the sector have fallen well below their ten-year average, leaving room for re-rating if execution improves.

Richemont Praised, Hermes Cut

Not every call was bullish. Barclays maintained its overweight rating on Richemont, the Cartier owner, citing exceptional pricing power across its jewellery brands. The bank argued the stock’s current multiple fails to reflect the strength of its underlying business.

Hermes received a more cautious reassessment. Barclays trimmed its price target sharply, moving from 2,310 euros to 1,700 euros, while holding an equal weight rating. Recent earnings raised questions about the durability of the brand’s premium growth story. Hermes currently trades at 33 times forward earnings, a significant premium to LVMH at 20 times.

The Sector Looks for an Inflection Point

Incoming analyst Viktoria Petrova takes over Barclays’ luxury coverage and projects the sector will return to roughly 3% revenue growth in 2026. She sees that stabilising near 4% annually through the end of the decade. Barclays described 2026 as a potential turning point after four consecutive years of contraction. The bank cautioned, however, that the industry’s established growth playbooks require a strategic rethink given lasting shifts in consumer behaviour.

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