European Luxury Stocks Slide

11 December 2018

Moncler, Tod’s and other European luxury stocks shares dropped as analysts flagged a succession of “negative signals” from high-spending consumers in Europe, China, Japan and the Middle East that could trigger sales and profit downgrades.

Moncler was the worst-performing clothier on the Stoxx 600 Personal & Household Goods index, with trading down 2.7%, while Tod’s fell 4.1 percent to its lowest level since August 2009. Swatch Group lost 2.3% in Zurich, while Kering, LVMH, Hermès International and Burberry Group were all down by at least a percent.

“The third phase of a sector slowdown scenario has just started,” Thierry Cota and Antoine Riou, analysts at Société Générale in Paris, wrote in a report to clients. “We should only get a sense of the scale of the downcycle by mid-2019. So, when do we move back in? Not anytime soon.”

Luxury items sales are facing disruption in France, due to the recent Yellow Vest protests that have led to store shutdowns in Paris’ centre. The country’s finance minister dubbed the riots “a catastrophe” for the economy and retailers. Tourism in the capital has also slumped, effecting a major source of revenue for companies including Hermès.

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