European Luxury Stocks Outlook 2025

European luxury stocks are gaining momentum as Goldman Sachs projects modest growth for the sector in 2025, anticipating a 3% increase in currency-adjusted revenue.

Despite a tempered outlook, this reassessment creates opportunities for selective stock investments in the industry. The report emphasizes long-term structural drivers such as high barriers to entry, strong brand equity, and pricing power, which offer resilience even in slower growth periods.

Valuation support is emerging with current price-to-earnings ratios approximately 11% below the 10-year averages, allowing savvy investors to capitalize on potential rebounds as Western markets show early recovery signs and anticipation builds for a cyclical Chinese demand upturn in late 2025.

Goldman Sachs highlights China’s critical role, noting a delayed recovery due to ongoing real estate challenges and broader economic headwinds. They draw parallels to past downturns, projecting a positive recovery in Chinese luxury demand by Q3 2025, driven by improved consumer confidence and government stimulus.

Specific companies, including Moncler and Prada, are spotlighted as poised to outperform, while brands like LVMH, Moncler, and Prada are acknowledged for their ability to expand market share at attractive valuations. Defensive stocks such as Brunello Cucinelli and Zegna are identified as well-positioned to handle near-term challenges.

The 2025 sector dynamics suggest pricing will be the main growth driver, with expected revenue contributions of 3–4%. However, margins are anticipated to remain flat early in the year, improving later on. Analysts advise caution against turnaround stories like Kering due to a more cautious outlook.

Risks persist, including uncertainty about China’s recovery, macroeconomic pressures, and possible regulatory challenges. Nonetheless, the 2025 outlook offers guidance for discerning investors favoring brands with defensive qualities, robust pricing strategies, and exposure to recovering regions like China.

The sector's resilience and long-term growth potential, fueled by strong consumer demand and the ongoing appeal of luxury brands, present a compelling investment case for European luxury stocks as markets adapt to these emerging dynamics.