Global market rout darkens outlook for European luxury labels.
Growing fears that Donald Trump’s tariff blitz will plunge the world into recession are dashing hopes in the $400-billion-a-year luxury industry that wealthy Americans might help to pull it out of the biggest slump in years.
One Wall Street analyst now expects worldwide sales of luxury goods will fall by as much as 2% this year, down from a previous forecast for 5% growth. If confirmed, that would mark the industry’s longest downturn in over two decades.
Bernstein analyst Luca Solca cited the fallout from Trump’s April 2 announcement of import taxes on major U.S. trading partners as reasons for the downgrade.
“Uncertainty, and the likely continuing rout in stock markets, are creating a self-fulfilling prophecy: a global recession,” he wrote in a note to clients.
Trump’s tariffs were more sweeping than many market players feared, and have prompted retaliation from China, igniting a trade war that has left stock markets reeling.
Shares in sector leader LVMH are now down 2% since the start of the year, while Gucci owner Kering is down 31%. Hermes and Cartier owner Richemont, seen as better placed than many to weather a downturn thanks to their wealthier clientele, are down 8% and 6% respectively.
Source: Finance.Yahoo