Investors turned back to luxury stocks, and since then luxury stocks have outperformed the market.
The Zhitong Finance App learned that Citibank analysts wrote in the report that flexible profit margins in the fourth quarter caused investors to switch back to luxury stocks. Since then, luxury stocks have outperformed the market.
The slow economic recovery, combined with slowing demand in Europe and the US, put pressure on brands such as LVMH (LVMHF.US) and Burberry (BURBY.US) in 2023, causing analysts to lower profit expectations for the industry.
However, LVMH announced an organic 10% increase in fourth-quarter revenue last month as wealthy consumers still prefer the company's expensive handbags and champagne, although not all of its peers performed as well.
European luxury stocks once again outperform the market
Citibank analysts Thomas Chauvet and Lorenzo Bracco said, “The downgrade cycle is probably almost over.” They expect normalization rather than contraction in 2024.
The European luxury stock index has risen 13% so far this year, far exceeding the 3.4% increase of the pan-European Stoxx 600 index. In 2023, the sector rose 8.3%, while European stocks rose 13%.