Ahhhhh! Spring In Paris!

Research evidence excerpt

Ahhhhh! Spring In Paris!

EUROPE | Luxury Brands EquityMayResearch17, 2026

We share thoughts on the luxury sector ahead of peers hosting conferences in

Paris. Our global travels confirm that European discretionary names remain an

afterthought for many investors at a time of vast, tech-driven outperformance.

Possible neutral narratives from next week's meetings could underpin a short-

term rebound, given sharp YTD underperformance. And yet constructing a

compounding narrative remains a tough endeavour.

Who cares about luxury? Our travels across North America, Asia and Europe have confirmed the

extent to which the luxury industry's anaemic growth has led to a building disinterest amongst

fundamental investors. The overall sector has fallen by 12% YTD compared to the STOXX600 index

at +4%. All of this confirming the short-lived moment in the sun by European equities given S&P500

at +9% YTD, with the average of the four largest Asian indices at +31%.

Q1 reporting, a mixed bag despite a strong US ... We estimate that overall industry growth in

calendar Q1 2026 was +4.8% (or c.6% ex ME dilution). The optimists amongst us could point to this

quarterly print as the strongest since Q423 and supportive of sell-side modelling for a Q2 step up to

+6%, with H2 at +5%. All of this is a necessary preamble to underpin 2027 industry growth of +6%.

The more cautiously spirited may flag that this growth was achieved at a time of unprecedented

equity wealth creation in Asia (+90% in the past 13 months) and with US markets holding at peaks

after a 50% appreciation since 5 Apr 25. Can US revenue growth of 7.3% (with inflation likely at c.5%

given tariff-led price hikes) on a comp base of -1% really enthuse at a time when many investors'

portfolios have appreciated this sharply?

...