Will America make luxury great again?
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WILL AMERICA MAKE LUXURY GREAT AGAIN?
Another volatile earnings season for luxury has drawn to a close, with China's stimulus and the U.S. presidential election overshadowing weak growth across most companies.
UBS says organic sales have fallen by an average 1% in Q3 from Q2, and even though the bank says is mindful that "luxury fatigue" could persist beyond 2024, it remains structurally positive.
But what could make earnings trend turn positive?
The Swiss bank is pinning its hopes on American consumers, which average around 20% of sector sales, noting some green shoots with the commentary around slightly improving trends.
"Although it's still early days after the election, we remain of the view that the American luxury consumer constitutes the biggest source of upside for the sector in the short- and long-term," Zuzanna Pusz and other UBS analysts write.
"The reduced political uncertainty now following the presidential election, and the wealth effect associated with the stock market and cryptocurrencies really could drive a more substantial pick-up in demand locally," they add.
Their top picks remain Hermes HRMS.PA, Richemont CFR.S and Brunello Cucinelli BCU.MI.
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