Luxury Groups: LVMH, Kering, Hermès, Richemont, Prada — 2026-10-09
China’s new tax crackdown on wealthy individuals has emerged as a fresh threat to luxury sales, compounding existing concerns over slowing US consumer spending. Amid this volatility, Goldman Sachs initiated coverage on European luxury stocks, rating only four companies as "Buy" while warning that sector growth will remain muted until 2027. Meanwhile, Prada faces specific analyst warnings regarding its Miu Miu brand ahead of upcoming third-quarter results.
Luxury Groups: LVMH, Kering, Hermès, Richemont, Prada — 2026-10-09
Top developments
China’s tax enforcement threatens high-net-worth spending
China’s government has intensified efforts to combat tax evasion among wealthy individuals, requiring residents to declare offshore accounts and pay back taxes by October 22. This policy shift directly impacts the luxury sector, as Chinese consumers account for approximately 20% of global luxury sales. The crackdown adds to the pressure from already faltering US spending and geopolitical uncertainties, creating a "triple threat" for brands like LVMH, Hermès, and Kering as they prepare for third-quarter earnings reports.
Goldman Sachs initiates coverage with cautious outlook
Goldman Sachs initiated coverage on 10 European luxury stocks, assigning "Buy" ratings to only four names: Richemont, LVMH, Moncler, and Prada. The bank assigned "Neutral" ratings to Kering, Burberry, Brunello Cucinelli, and Zegna, while issuing a "Sell" rating for Hermès and Swatch Group. Analysts argue that the current muted sector growth is a temporary phase of post-COVID normalization, predicting 2027 will mark a turning point for the industry.
US luxury spending declines for third consecutive month
US luxury credit card spending dropped by 6% in September 2026, marking the third consecutive monthly decline according to Citi data. This trend signals weakening demand in the world's largest luxury market, driven by economic uncertainty ahead of midterm elections. Morgan Stanley has warned that there is little scope for growth in the near term, with brands like Tapestry, LVMH, and Ferragamo facing significant headwinds.
Prada faces analyst downgrade for Miu Miu brand
Ahead of its October 22 earnings release, Barclays analysts have lowered their target price for Prada to HK$59, citing expectations of a slowdown for its Miu Miu brand. While maintaining an "Overweight" rating on the group, the analysts estimate total group revenues at €1.47 billion for the quarter. This comes as Versace is expected to report retail sales of €86 million, highlighting diverging performance within the Italian luxury ecosystem.
Local view
France French financial media, including BFM Bourse and Le Revenu, are focusing heavily on the correlation between China's fiscal tightening and the stock performance of domestic giants. Reports indicate that LVMH and Hermès shares have fallen 37% year-to-date, reflecting investor anxiety over the deterioration in China. BFMTV specifically highlights that the new tax rules requiring wealthy Chinese residents to pay arrears could significantly slow down sales of high-end products in the short term.
Italy Italian outlets like MilanoFinanza and Pambianconews are analyzing the mixed signals in the local market. While Moncler and Brunello Cucinelli are seeing positive momentum in Milan, with Bernstein upgrading ratings, the broader sector is described as having a "weak autumn." Pambianconews notes that while the US remains a resilient market, the weakness in China and sluggish European consumption are weighing heavily on Q3 sales projections.
Context & numbers
- Global Luxury Spending: Worldwide luxury spending reached €1,443 billion in 2025, with Bain & Company predicting gradual stabilization in 2026 rather than robust growth.
- Customer Base Shrinkage: The global luxury customer base has shrunk to approximately 340 million people in 2025, down from 400 million in 2022, and is expected to lose another 20–30 million clients.
- LVMH H1 Performance: In its most recent reported period (H1 2026), LVMH reported organic revenue growth of 2% for the half-year and 3% for the second quarter, indicating a sequential improvement but still below historical peaks.
On the radar
- October 22 Deadline: The deadline for wealthy Chinese individuals to declare offshore assets and pay back taxes is a critical date to watch for immediate consumer sentiment shifts.
- Q3 Earnings Season: Key players like Prada (Oct 22) and other major European houses are scheduled to release their third-quarter results in the coming weeks, which will provide concrete data on the impact of the US slowdown and China's tax policies.
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