1、7T2se3r0Ot6kwoPa7T2se3r0Ot6kwoPaDistributed on:11/07/2025 04:02:06 GMTDistributed on:11/07/2025 04:02:06 GMT11 July 2025DB ViewThe 2Q luxury reporting season is unlikely to look very pretty for most brands.The sequential slowdown from 1Q is well understood by investors.The question increasingly unde

2、r debate is whether 2Q is the trough(probably given easier 3Q comparatives)and whether there can be an improvement in earnings momentum in the sector(less obvious given the harder 4Q comparative base).This sets up a tricky period of navigation for the remainder of 2025.The sector valuation on 22x ca

3、l 2026 PE is more appealing,in our view.There is a majority view of waiting for the data to turn amongst investors.We believe Hermes offers the most attractive investment in the sector but,in our discussions with investors,the name that stands out on valuation grounds is LVMH,despite the relative we

4、akness seen across many of the divisions.2Q expected to show continued divergence in cFX salesThe main rationale for the 2Q slowdown is weaker tourist spending in both Japan and Europe from Chinese and US consumers.There appears to have been little change in the domestic US,European and Chinese cons

5、umer over the period.On average across our coverage,this sees a c.-2%sequential decline from 1Q into 2Q.The consensual longs of Richemont(5%cFX)and Hermes(8%cFX)remain best placed for 2Q sales growth followed by the more debated Burberry(-2%cFX).Moncler(-1%cFX)has been weaker than expected given the

6、re is somewhat muted brand relevance in the summer period.LVMH(Group-4%and F&L-8%)and Kering(Group-15%and Gucci-25%)are both expected to be weak but this is well flagged to investors.Pressure on margins in 1HThe weaker-than-expected sales performance should see 1H margins contract between-140bp at H