Global Luxury Goods: Outlook 2026 - Preparing for a Gradual Evolution
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Bernstein forecasts a gradual evolution for the global luxury goods sector in 2026, projecting constant-currency growth of approximately 5%. The report anticipates a slow U-shaped recovery in Chinese demand, deeming a V-shaped rebound highly improbable. Meanwhile, the industry continues to digest post-pandemic excesses characterized by aggressive pricing and a lack of innovation.
The high-end segment remains supported by K-shaped wealth and income divergence, though soft luxury giants face structural challenges as their trading-up potential peaks. Bernstein advises shifting investment portfolios from self-help situations toward high-quality names, contingent upon continued positive surprises in the fourth quarter of 2025.
Richemont is the top pick, benefiting from jewelry outperformance and improved capital allocation following the YNAP divestiture. Hermès and Brunello Cucinelli are also favored for quality and mean-reversion potential. LVMH sits between high-quality and self-help categories. For self-help plays, the firm recommends a long Prada and short Kering trade, while identifying Burberry as a top European turnaround candidate. Key target prices include 200.00 CHF for Richemont (Outperform), 2,650.00 EUR for Hermès (Outperform), and 250.00 EUR for Kering (Underperform). Risks remain tied to macroeconomic fragility and potential financial market corrections.