European Earnings Preview: European luxury faces headwinds from the Iranian conflict; LVMH, Kering and Hermes all due this week

• Key Earnings dates: LVMH (MC FP) on 13th Apr, Kering (KER  FP) 14th Apr, Hermes (RMS FP) 15th Apr.
• Focus: 1) the Middle Eastern situation and the potential impact on regional demand, 2) regional trends ex-Middle East, with focus on China during/after the Chinese New Year and on European tourism, 3) category developments (leather vs jewellery), 4) initial consumer reaction to new luxury products, which JPM believes could address consumer fatigue.
• Middle East: The Middle East situation will garner particular focus amongst investors, which accounts for only around 5% of global luxury consumption – but could have a significant impact on profits. It is worth noting that analysts at UBS have not seen evidence of a “demand slowdown”, particularly in Asia. The picture in the Middle East is vastly different, with recent Reuters sources suggesting that Luxury brands sales have dropped 30-50% Y/Y at the Mall of the Emirates in March; footfall at the Dubai mall has reportedly fallen 50%.
• Recovery delayed: Given the Middle East situation, analysts at Bernstein raise concerns that the recent recovery in the Luxury sector could face temporary headwinds, adding that at best, the recovery will be postponed into the “second half or into next year”. UBS also highlight the “very negative market sentiment and depressed valuations”, but suggest that even very “modest” Q1 beats could lead to disproportional upside.
• Stock specifics: RBC writes that recent de-escalation efforts will allow for a near-term re-rating, believing the “set-up is starting to look more attractive”. In terms of stock specifics, analysts prefer LVMH (MC FP) and Burberry (BRBY LN), whilst viewing the likes of Moncler (MONC IM) and Brunello Cucinelli (BC IM) as “near-term winners”, given their limited exposure to the Middle East; analysts at UBS favour Richemont (CFR SW) and LVMH (MC FP). Analysts at the Swiss bank are less constructive on Hermes (RMS FP), highlighting concerns related to “elevated” long-term earnings expectations.
• Luxury so far: Brunello Cucinelli reported its Q1’2026 results on Thursday 9th April, where shares rose c. 5.5% following strong revenue metrics, driven by robust global demand, particularly in the Americas and Asia. But it is worth noting the Co. saw only modest growth in Europe; in the Middle East the Co. saw a 50% decline in March foot traffic across its stores – though its exposure to the region is relatively limited vs peers.

LVMH Q1’2026 Earnings Expectations (EUR):

• Sales: 19.49bln (prev. 20.31bln Y/Y)
• Total Sales: +2%
• Leather-goods sales: 9.46bln (prev. 10.11bln Y/Y)

LVMH FY26 Earnings Expectations (EUR):

• Sales: 81.60bln (prev. 80.8bln Y/Y)
• EBIT: 18.14bln (prev. 17.8bln Y/Y)
• EPS: 22.91 (prev. 21.86 Y/Y)